MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD JOE … · BUILDING CALIFORNIA ENVIRONMENTAL...
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MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD JOE SERNA, JR. BUILDING CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY BYRON SHER AUDITORIUM, SECOND FLOOR 1001 I STREET SACRAMENTO, CALIFORNIA THURSDAY, JUNE 23, 2011 9:09 A.M. TIFFANY C. KRAFT, CSR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 12277 CALIFORNIA REPORTING, LLC (415) 457-4417
Transcript of MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD JOE … · BUILDING CALIFORNIA ENVIRONMENTAL...
MEETING
STATE OF CALIFORNIA
AIR RESOURCES BOARD
JOE SERNA, JR. BUILDING
CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY
BYRON SHER AUDITORIUM, SECOND FLOOR
1001 I STREET
SACRAMENTO, CALIFORNIA
THURSDAY, JUNE 23, 2011
9:09 A.M.
TIFFANY C. KRAFT, CSRCERTIFIED SHORTHAND REPORTERLICENSE NUMBER 12277
CALIFORNIA REPORTING, LLC(415) 457-4417
APPEARANCES
BOARD MEMBERS
Ms. Mary Nichols, Chairperson
Dr. John Balmes
Ms. Sandra Berg
Ms. Dorene D'Adamo
Mrs. Barbara Riordan
Dr. Daniel Sperling
Mr. Ken Yeager
STAFF
Mr. James Goldstene, Executive Officer
Ms. La Ronda Bowen, Ombudsman
Mr. Tom Cackette, Chief Deputy Executive Officer
Mr. Bob Fletcher, Deputy Executive Officer
Ms. Ellen Peter, Chief Counsel
Ms. Lynn Terry, Deputy Executive Office
Ms. Analisa Bevan, Chief, Sustainable Transportation Technology Branch, Mobile Source Control Division
Ms. Mary Alice Morency, Board Clerk
Ms. Bonnie Soriano, Staff Air Pollution Specialist, Technical Analysis Section, SSD
Ms. Gayle Sweigert, Manager, Air Quality Analysis Section, PTSD
APPEARANCES CONTINUED
ALSO PRESENT
Mr. Bill Aboudi, AB Trucking
Ms. Diane Bailey, NRDC
Ms. Rosario Berretta, Daimler
Mr. Tim Brown, University of California, Irvine
Mr. James Boyd, Commissioner, California Energy Commission
Mr. Fernando Corral, Plug Power
Captain Aaron Cudnohufsky
Mr. Steve Eckhardt, Linde, North America
Mr. Stephen Ellis, American Honda Motor Company
Mr. Randal Friedman, Navy Region Southwest
Ms. Katrina Fritz-Intwala, UTC Power
Mr. Cooper Hanning, Natural Resources Defense Council
Mr. Henry Hogo, South Coast AQMD
Ms. Bonnie Holmes-Gen, American Lung Association
Mr. Edward Kiczek, Air Products and Chemicals, Inc.
Mr. Dan Krokosky, Chevron Shipping Company
Mr. Dominick Lee, VA Transportation, Inc.
Mr. Jaimie Levin, Alameda-Contra Costa Transit District
Mr. Marty Lico, Whole Foods Market
Mr. Ronald Light, West State Alliance
Ms. Kathy Long, Ventura County Supervisor
Ms. Joan Ogden, Co-Director, Hydrogen Pathways Program, Institute of Transportation Studies, University of California, Davis
APPEARANCES CONTINUED
ALSO PRESENT
Mr. Henry Pak, Hanjin Shipping
Dr. Scott Samuelsen, National Fuel Cell Research Center
Mr. Martin Schlageter, Coalition for Clean Air
Mr. Jonathan Sharkey, Councilmember of Port Hueneme
Mr. John Shears, Research Coordinator, Center for Energy Efficiency and Renewable Technology
Mr. Miguel Silva, Horizon Freight System
Ms. Gloria Stockmyer, Stockmyer Trucking, Inc.
Dr. Andreas Truckenbrodt, Automotive Fuel Cell Corporation
Mr. David Tulauskas, General Motors
Mr. Mike Upp, ClearEdge Power
Mr. Michael Villegas, Ventura County
Mr. Justin Ward, Toyota Technical Center
INDEX
PageItem 11-4-1
Motion 4Vote 4
Item 11-4-2Motion 6Vote 6
Item 11-4-3Chairperson Nichols 6Executive Officer Goldstene 7Staff Presentation 9Mr. Corral 137
Item 11-4-4Chairperson Nichols 141Executive Officer Goldstene 141Staff Presentation 142Q&A by Board 150
Item 11-4-5Chairperson Nichols 154Executive Officer Goldstene 156Staff Presentation 157Navy Presentation 174Mr. Villegas 183Ms. Long 185Mr. Sharkey 187Mr. Schlageter 188Mr. Hogo 190Mr. Hanning 192Ms. Bailey 193Mr. Friedman 195Mr. Krokosky 197Ms. Holmes-Gen 199Q&A by Board 201Motion 213Vote 214
INDEX CONTINUED
Page
Public CommentMr. Schlageter 215Ms. Stockmyer 217Mr. Silva 218Mr. Aboudi 220Mr. Lee 223Mr. Light 226
Adjournment 238 Reporter's Certificate 239
PROCEEDINGS
CHAIRPERSON NICHOLS: Good morning. I'd like to
call the June 23rd, 2011 public meeting of Air Resources
Board to order.
And we will begin, as we normally do, with the
Pledge of Allegiance. If you'll all please rise.
Please rise.
(Thereupon the Pledge of Allegiance was
Recited in unison.)
CHAIRPERSON NICHOLS: Thank you.
The clerk will please call the roll.
BOARD CLERK MORENCY: Dr. Balmes?
BOARD MEMBER BALMES: Here.
BOARD CLERK MORENCY: Ms. Berg?
BOARD MEMBER BERG: Here.
BOARD CLERK MORENCY: Ms. D'Adamo?
BOARD MEMBER D'ADAMO: Here.
BOARD CLERK MORENCY: Ms. Kennard?
Mayor Loveridge?
Mrs. Riordan?
BOARD MEMBER RIORDAN: Here.
BOARD CLERK MORENCY: Supervisor Roberts?
Professor Sperling?
BOARD MEMBER SPERLING: Here.
BOARD CLERK MORENCY: Supervisor Yeager?
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BOARD MEMBER YEAGER: Here.
BOARD CLERK MORENCY: Chairman Nichols?
CHAIRPERSON NICHOLS: Here.
BOARD CLERK MORENCY: Madam Chairman, we have a
quorum.
CHAIRPERSON NICHOLS: Thank you very much.
I have to say that as you're going through the
roll, I was waiting for that one voice that always said,
"Present" when the rest of us said, "Here." Dr. Telles, I
think everybody knows, has left the Air Resources Board to
resume his life as a physician. And we miss him. But
that was one of his hallmarks. We always knew he was here
in the morning.
All right. I have a couple of announcements to
make. That is, if anyone wants to testify and you did not
sign up online, I would appreciate it if you'd fill out a
request card. And we still need you to check in with the
clerk even if you did sign in online, no matter what. I
expect we're going to be imposing our usual three-minute
time limit. And we appreciate it if people state their
first and last name when they come up to the podium, but
then put their testimony in their own words rather than
reading their remarks, because the written remarks will be
entered into the record.
I'm also required to ask you to look for the
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emergency exit signs that are at the rear and the side of
the room. In the event of a fire alarm or any other
emergency, we would be required to evacuate the room and
go outside until we get an all-clear signal.
So I think that's it for the official
announcements.
And my understanding is that our first item of
business this morning is the public hearing on the
particulate matter; is that correct?
EXECUTIVE OFFICER GOLDSTENE: Well, It's a
consent item, yes.
CHAIRPERSON NICHOLS: Oh, that's a consent item.
Okay.
EXECUTIVE OFFICER GOLDSTENE: We have two consent
items first.
CHAIRPERSON NICHOLS: Okay. Sorry.
EXECUTIVE OFFICER GOLDSTENE: That is one of
them.
CHAIRPERSON NICHOLS: Okay.
EXECUTIVE OFFICER GOLDSTENE: And the other is
about amendments to area designations for --
CHAIRPERSON NICHOLS: Yes, I see.
EXECUTIVE OFFICER GOLDSTENE: -- I mean the
components in the heavy --
CHAIRPERSON NICHOLS: Okay. So the emissions
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measurement allowance --
EXECUTIVE OFFICER GOLDSTENE: Right.
CHAIRPERSON NICHOLS: -- for the heavy-duty
diesel compliance regulation is a consent item. And we
were simply going to find out if there was anyone who had
asked to testify or if any Board members wanted to take
this item off the consent calendar.
Seeing none, then we are able to just go ahead
and close the record.
BOARD MEMBER RIORDAN: Would you like a motion?
CHAIRPERSON NICHOLS: I think we officially close
the record.
And if you have any ex partes to disclose, we
still need to make sure that we disclose them. I don't
see any.
Okay. Then we just need to make sure that you've
all looked at Resolution 11-19. And then I would ask for
a motion.
BOARD MEMBER RIORDAN: Madam Chairman, I would be
happy to approve the staff presentation and
recommendations and the resolution for this item 11-4-1.
BOARD MEMBER D'ADAMO: Second.
CHAIRPERSON NICHOLS: Thank you.
All in favor please say aye.
(Ayes)
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CHAIRPERSON NICHOLS: Any opposed?
All right. Carries unanimously.
This is a relatively new procedure for us, so
we're a little bit hesitant going through it here. But I
think it's a good one where we have a relatively routine
item for Board action and there isn't any public wish to
testify on it.
Okay. And then the second item --
BOARD MEMBER BERG: Madam Chairman, I think it's
great also to say that this particular amendment was
worked on by industry, by all stakeholders, and all
stakeholders agreed with the end result. And that was a
very positive. Sometimes we rush over those things and we
don't have them very often. So congratulations to staff.
CHAIRPERSON NICHOLS: Thank you. Thank you for
pointing that out.
Okay. The next item on the consent calendar is
Agenda Item 11-4-2, which is to consider the approval of
some proposed amendments to the area designations for
state ambient air quality standards.
And, again, I guess I should ask the clerk if any
witnesses have signed up to testify on this item.
BOARD CLERK MORENCY: No.
CHAIRPERSON NICHOLS: No.
Okay. Are there any Board members who would like
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to take this item off the consent calendar?
If not, then we can close the record. And all
the staff recommendations have been entered into the
record and any written submissions that we had. And we
have not been asked to extend the time period, so I will
officially close the record on this one. This is one
that's similar to an action we took on PM a month or two
back.
May I have a motion then?
BOARD MEMBER RIORDAN: Madam Chairman, I'd be
happy to move the staff recommendation and the resolution
that is before us.
CHAIRPERSON NICHOLS: All right. Do I have a
second?
BOARD MEMBER BALMES: Second.
CHAIRPERSON NICHOLS: All right. All in favor
please say aye.
(Ayes)
CHAIRPERSON NICHOLS: Any opposed?
Okay. Again, this is carried unanimously.
And we can now move to an informational report on
the status of fuel cell and hydrogen technology and
infrastructure. And I see we have a panel here of
distinguished guests to assist us in this effort.
Just to say a few words here. California has
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been working for a long time on zero emission vehicles,
the distributed generation, and other technology
development programs that have touched on the topic that
we're about to consider here today. The purpose of this
item is to give us an overview of how fuel cells and
hydrogen play a crucial part in achieving clean air and a
healthy environment. And I think we have been accused, I
would say it in those terms, of being an agency that has a
particular bias in favor of fuel cells. And I'm very
proud of the fact that we have played as critical a role
as we have over the years in advancing this technology. I
don't think it's a bias that's against any other form of
technology. We have maintained our commitment that our
goal here is clean air and reducing our impact on
greenhouse gases worldwide. And we believe, and
increasingly we now have good evidence to support the
fact, that this is one technology which can play a
critical role in getting us to where we want to go.
So with those few words, I guess I'd like to ask
Mr. Goldstene to introduce this item and our panel.
EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman
Nichols.
As you know, the Board established the zero
emission vehicle, distributed generation and various other
regulations and programs that foster the development and
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deployment of cleaner or zero emission technologies. The
deployment of fuel cells and hydrogen is a part of the
strategy for reducing smog-forming and climate-change
emissions in order for the state to attain its air quality
requirements and environmental policy goals.
In-house analyses have indicated that in order
for the transportation sector to achieve its fair share
reductions of climate change emissions by 2050, the
light-duty vehicle fleet in California must consist almost
entirely of vehicles using hydrogen fuel cells, battery
electric vehicles, and plug-in hybrids fueled by biofuels.
In addition, significant emission reductions can be
achieved through the use of fuel cells in stationary
applications to generate power, heat, and in some cases
hydrogen.
In the following presentation, staff and
stakeholders will present the status and challenges of
deploying fuel cells in stationary and mobile
applications.
I'm now going to turn the presentation over to
Analisa Bevan of the Mobile Source Control Division, who
will provide an overview of today's activities.
Analisa.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you, James.
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I'll bring up our presentations.
(Thereupon an overhead presentation was presented
as follows.)
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Good morning, Chairman Nichols and Board
members. Today a collection of representatives from
industry, academia, and public interest groups will
present you with an overview of the status of hydrogen and
fuel cell as used in vehicle and stationary applications.
We are providing this technology showcase in order to
prepare you for several regulatory decisions coming this
fall that may heavily rely on these technologies for
optimal success.
Presentations will include a brief overview of
what we've done to date to support hydrogen and fuel cells
and a primer on why hydrogen is of interest from an energy
and environmental standpoint. We'll hear reports on the
status of fuel cell technology, how well they're
performing, their durability, and their cost productions.
In our presentations from industry we've asked
presenters to provide you with a vision for the business
case and commercialization path for fuel cells and
hydrogen as well as to highlight any specific challenges
they face in bringing fuel cells and hydrogen to market in
California.
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Finally, we would like to leave you with a sense
of what actions are needed to ensure success for fuel cell
and hydrogen adoption and commercialization.
--o0o--
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: We're devoting a pretty generous amount of
time on your agenda to discuss this technology. Why is it
so important to us, you may ask. This slide may look
familiar. We've presented it a couple of times to
illustrate the way in which our vehicle fleet will need to
rapidly transition to electric drive in order to meet an
80 percent reduction in greenhouse gas emissions by 2050,
as Mr. Goldstene alluded to in his opening remarks.
This graph shows a fleet mix scenario that has
changed the 80 percent reduction target. In this scenario
nearly all of the cars on the road are electric drive.
While we expect that battery electric vehicles and plug-in
hybrids can make up a good chunk of that fleet, in order
to reach the vast majority of the market fuel cell
vehicles with driving range and refuel times similar to
what we experience now with gasoline cars will be needed.
An introduction of those vehicles into the new car sales
market needs to begin in the very near future in order to
build the population to the level shown here.
So we feel it is important to relay to you the
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status of this technology, as it plays such an important
role in reaching our climate change goals.
--o0o--
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: So what has California been doing to support
hydrogen and fuel cell commercialization to date? We've
been a very active partner in hydrogen and fuel cell
commercialization since the late 1990s. With the
formation of the California Fuel Cell Partnership and the
California Stationary Fuel Cell Collaborative, we've
marked our commitment to working with our industry,
government, and energy provider partners to pave the way
for fuel cells and hydrogen markets. These organizations
formed to share information across stakeholders, remove
road blocks and work together to facilitate preparation of
California as a leading market for fuel cells and
hydrogen.
Our more tangible contribution in the last five
years has been our investment in hydrogen infrastructure.
Starting with the development of California's hydrogen
highway network plan in 2004 and culminating in the
funding of 9 stations by the Air Resources Board and 12
stations by the CEC so far, the state has demonstrated a
commitment to establishing a critically needed,
efficiently distributed, and publicly accessible network
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of retail hydrogen stations. The state's investment in
hydrogen infrastructure totals $35 million to date.
--o0o--
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: This slide shows the cluster approach to
developing the hydrogen infrastructure network, with a
focus initially on the western portion of the greater Los
Angeles region and the beginnings of station deployment in
the San Francisco Bay Area and Sacramento. These clusters
support the automakers' marketing plans for consumer
placements of vehicles now and in the near term. And
today's showcase will hopefully provide you with a sense
of how this nascent network will need to grow and how real
the cars are that will make use of it.
As you will no doubt hear from our presenters,
this network is a start, but only a start, to what will be
needed to support full commercial rollout of hydrogen fuel
cell vehicles.
--o0o--
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: We're taking the opportunity now to update
you on hydrogen and fuel cells because coming in November
our Advanced Clean Cars Regulatory packages will have
several components that include hydrogen and fuel cells in
the compliance mix.
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First, the Zero Emission Vehicle Amendments
package will be proposing increases to the volume
requirements for ZEVs, with expectations that the mix of
technology used to meet pure zero emission vehicle
requirement will rely heavily on fuel cell vehicles in the
outer years of the program. Our goal for the requirements
is to reach the technology cost reductions achieved
through volume production by 2025.
Second, the Clean Fuels Outlet regulation will be
amended to better incorporate fuels used by ZEVs,
especially hydrogen. The Clean Fuels Outlet is a
regulation which requires the installation of alternative
fueling outlets when a specified number of alternative
fuel vehicles reaches the market. This acts as a
backstop, ensuring that new fuel is available to support
emerging alternative fuel vehicles.
--o0o--
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: The program we've laid out for you today
will be a series of panels covering introductory
groundwork on energy and environment, stationary
applications, fuel cells used in motor vehicles, and
infrastructure. Each panel will be seated up here with me
to give their presentations. And at the end of each panel
session, hopefully we'll have time for questions and
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answers.
At the conclusion of our last panel, we'll move
to a tour of exhibits outside in the courtyard downstairs
where we will be able to see examples of the technologies
being presented.
--o0o--
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: So without further cutting into our agenda
of expert speakers, I will now turn the presentation over
to our first introductory panel. We will hear from our
sister agency, the California Energy Commission, about how
hydrogen plays in California's energy future; from our
colleague in the NGO community, who will share our
perspective on fuel cells and hydrogen from a renewable
energy and overall system efficiency standpoint; and from
our research partner at UC Davis to provide an overview of
how hydrogen stacks up environmentally compared to other
motor vehicles fuels.
So we'll start with a presentation from
Commissioner James Boyd from the California Energy
Commission.
CEC COMMISSIONER BOYD: Thank you, Analisa.
Good morning --
CHAIRPERSON NICHOLS: Good morning. No stranger
to the Air Resources Board.
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CEC COMMISSIONER BOYD: -- Chairman Nichols and
Board members. It's great to be back, and I appreciates
the invitation to participate in this showcase of
stationary mobile applications.
And thank you for recognizing the role that the
Energy Commission plays in this arena. As most of us
know, our two agencies are literally joined at the hip -
energy, air quality energy, environment energy, climate
change, you can't separate them. So we spend long hours
and the staff spend long hours working together on a
variety of issues.
But it's particularly pleasing for me to be here
and hear about this technology, which of course I followed
as a member of the staff of the Air Board long ago. And
So I'm personally pleased to see progress in the
development of what many of us consider the ultimate clean
fuel.
I'm giving only an oral presentation. I hear
today -- well, I've seen advanced previews of some of the
presentations and I knew the subject would be very
thoroughly covered. I may choose to provide you some
additional information because in five minutes I couldn't
possibly tell you all that the Energy Commission has done
down through the years in the fuel cell area. But I'll
comment on some overarching policies from an energy
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perspective that certainly touch on some of our role in
hydrogen.
In many ways the development and use of hydrogen
are centered on energy either as a fuel or, as many
believe, as an electricity source, one way or another;
which will explain why the Energy Commission has had and
continues to have a fairly significant role in this area.
As a fuel, we see and have seen hydrogen as a
major long-term contributor to displacing petroleum in the
2020 to 2050 time frame and helping us achieve energy
diversity goals adopted by both the ARB and the CEC.
We also see hydrogen as a significant option to
achieve reductions of greenhouse gases and criteria air
pollutants, something we've both worked on together for a
long, long time.
As an electricity source, we've added hydrogen to
the list of renewable electricity options for quite some
time. Now, to help achieve our 33 percent renewable
portfolio standard and even more so the idea that fuel
cells are expected to be a major component of our state's
distributed generation goals and program, particularly
since Governor Brown has really emphasized the role of
distributed generation in our electricity energy future.
And even though we are just seeing some of the
earlier stages of development, we've seen lots of and paid
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for lots of research and development. We're now seeing
demonstration and deployment of fuel cell technology. We
expect hydrogen fuel and electricity projects will produce
many of the high technology jobs that this state is noted
for, and we certainly look forward to those opportunities.
The Energy Commission has two main tracks for
hydrogen work, stationary and mobile source. I'll start
off with mobile source since it's perhaps more familiar.
And of course we've been a player with your agency for
quite sometime in the fuel cell partnership, managing some
of the programs and always participating as a charter
member of that activity. And, finally, after years of
collectively working together, succeeded in seeing AB 118,
the so-called Alternative Fuels and Vehicle Technology
Program, passed a few short years ago to provide money to
the Energy Commission and the Air Resources Board to
invest in alternative fuels and vehicle technology for our
future.
The Energy Commission has made some substantial
awards and plans to do more, $16 million awarded, to
develop the first-phase hydrogen fueling station network
at eleven sites in southern California, the San Francisco
Bay Area, and in Sacramento. One of the projects of
course was for the transit station at AC Transit In The
Bay Area. And it'll be used to fuel 12 hydrogen buses in
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the Bay Area.
An additional $18 million has now been allocated
and awarded, and this fall we expect to see these dollars
expand the network to create the foundation for the 50,000
hydrogen vehicles that are promised by 2015.
Many of the infrastructure installers and
operators who receive these funds, I note, are here to
speak to you today. So you will be thoroughly briefed on
those subject areas.
The CEC signed a $4 million agreement with the
California Department of Food and Agriculture's Division
of Weights and Measures to create a standard to dispense
fuel and allow fueling stations to sell the fuel. And we
all anxiously await for that project to be completed.
It's underway. We hope to see the results next year.
Hydrogen projects are also eligible under the 118
program and funds have been allocated for medium-duty and
heavy-duty vehicles in engine prototype development. And
vehicle and component plant manufacturing plants are also
eligible for these dollars, leading to my comment about
jobs in our future.
I would like to note that the Energy Commission's
Public Interest Energy Research Program, or PIER Program
as we know it, which is before the Legislature for
reauthorization we all hope, has long funded analyses and
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development of stationary hydrogen fuel cell projects,
including work at a host of demonstration sites and
objectives to improve power density and a variety of
applications in the electricity area.
I guess I'm done.
One last comment, if I might. Bioenergy and
biopower are now a big issue for all of us - biofuels,
biopower, all within the framework of bioenergy. These
are major activities that the CEC, and for me personally,
and the idea of renewable energy for hydrogen is a major
objective of ours. We are suddenly seeing a huge interest
in distributed generation of small fuel cells as back-up
generation for lots of activities. As a result of federal
requirements that fuels -- that cell tower operators and
railroads and light rail systems have back-up systems,
they're all turning to us suddenly for fuel cells and
renewable hydrogen, and we are about to launch some
significant programs there.
And in closing, I would just say the PIER Program
has done incredible amounts of work on road maps for
stationary fuel cells, advanced fuel cells, and of course
supported as long as we legally could the vehicle arena.
So thank you for this opportunity. And I
continue to look forward to working with this agency for
my remaining six months on this topic. But I know the
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agency will continue to work in cooperation as we have for
years.
CHAIRPERSON NICHOLS: Thank you very much,
Commissioner Boyd. It has been a long-term partnership,
as you say, with the Energy Commission providing more than
its fair share of the funding and probably taking more
than its fair share of the heat for any opposition that
was out there. But I think it's -- without, you know,
dwelling on that aspect of it too much, I think it's a
really good example of how a long-term commitment from a
policy perspective to try to look for ways in which we can
partner in finding technologies that will meet our policy
needs has really paid off. And obviously that's the point
of today's showcase, is to let people see some of the
examples of things that are coming to the floor.
So I just want to thank for taking your time on
short notice to come and be with us this morning and for
your leadership on this issue. Thanks a lot.
CEC COMMISSIONER BOYD: Thank you.
CHAIRPERSON NICHOLS: Analisa, are you going to
introduce our next speaker,
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Yes, I am.
CHAIRPERSON NICHOLS: Okay, great.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
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CHIEF BEVAN: Our next speaker is John Shears from the
Center for Energy Efficiency and Renewable Technology.
MR. SHEARS: Good morning, Chair Nichols and
members of the Board. Thanks for the opportunity to speak
today on our hope for the future -- continuing future with
hydrogen and the fuel cells.
So just make sure my technology works here.
--o0o--
MR. SHEARS: So in feeding off Commissioner
Boyd's remarks, I here thought it would be useful to just
show the potential resource and the potential for
synergies on renewable biogas. And we at CEERT are very
excited about, you know, the opportunities to potentially
leverage this very substantial resource here in California
for use in fuel cells. This is also very compatible with
Governor Brown's initiative seeking to have 12,000
megawatts of distributed generation deployed -- renewable
generation, distributed generation deployed in California
by 2020.
--o0o--
MR. SHEARS: I won't belabor the benefits of
fuel cells except to, you know, highlight the fact that
from renewable resources of course we get near zero CO2
emissions. We're always leery about always claiming zero.
But functionally close enough to zero on CO2 emissions.
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And of course the great, great air quality benefits that
come from the use of fuel cells. And I know under our SIP
challenges there's hope for opportunity where fuel cells
may help fill in for some of the black box emissions
reductions the Board and air districts are seeking.
--o0o--
MR. SHEARS: So we at CEERT like to think of fuel
cells as a family of technologies and are thinking about
how to build an ecosystem around fuel cells. And as it
turns out, we have a very fine example right now with the
Orange County Sanitation District. And I understand Dr.
Samuelsen will be talking more extensively about this
later today. But this is an example where we can take
advantage of the synergies where we have biogas resources
available to use to generate power so we don't need to
build new capacity on the broader grid and also use
surplus biogas to generate renewable hydrogen from which
we can also fuel fuel-cell vehicles.
--o0o--
MR. SHEARS: So indeed, besides this just being a
concept, this project is actually up and running as of
this spring and is in fact generating power and producing
hydrogen for the fueling of vehicles.
--o0o--
So speaking of vehicles, you know, CEERT and many
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of the NGOs who work on clean transportation are strong
supporters of fuel cell vehicles, while also being strong
supporters of battery electric and various forms of
plug-in electric vehicles.
We see fuel cells as having an important part to
play because they have applications that, you know, we can
see as being more directly linked to conventional
approaches to personal transportation for the time being.
And also in the medium and the heavy-duty sectors, fuel
cells are more amenable to use in long haul transport.
Battery electrics have more compromise capacity
at the moment, so they're more amenable to smaller,
lighter vehicles; shorter trips; more suitable probably to
dense urban environments. But that's not to say that
batteries don't also have a role to play, and applications
are being developed in the medium and heavy-duty sectors;
and, in fact, in the South Coast there's work underway on
drayage classic-type trucks.
But certainly fuel cell vehicles in the long run
we feel have an important role to play and we can see a
clearer path for more conventional applications of fuel
cells, you know, setting aside the challenges that we face
with the infrastructure.
--o0o--
MR. SHEARS: So the infrastructure still remains
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a challenge. CARB has funded fueling stations in the
past. The AB 118 program through Energy Commission is
continuing to do that now. And what we hope for in the
future is that both the CEC through the AB 118 program can
build the infrastructure to help create the market
conditions suitable to help with the implementation of the
clean fuels outlet regulation once that is finally
formulated and put into implementation.
So we look forward to working together with both
California Air Resources Board and the Energy Commission
to develop a comprehensive approach to expedite
infrastructure in support of the 2015 to 2017 deployment
especially of the large numbers of passenger vehicles
coming into California.
Thank you.
CHAIRPERSON NICHOLS: Thank you.
Any questions at this point?
We'll let you all finish the presentations, I
guess. Thanks.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you, John.
Our next speaker is Dr. Joan Ogden from the
Institute of Transportation Studies at UC Davis.
DR. OGDEN: Thanks, Analisa.
(Thereupon an overhead presentation was
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presented as follows.)
DR. OGDEN: Let's see. I'll go to my first slide
here.
I'm going to talk a little about the
environmental performance, especially with respect to
greenhouse gas emissions for hydrogen fuel cell vehicles
and compared to several other alternatives.
--o0o--
DR. OGDEN: One of the interesting things about
hydrogen, like electricity, you can make it from lots of
different things. And this gives a lot of diversity of
supply. Just, for example, renewables like wind or solar
or can be used to electrolyze -- power electrolyzers to
make hydrogen. You can make hydrogen from a variety of
biomass roots, including the biogas root that John
mentioned, but also gasification. Also make it from
fossil fuels, natural gas, which is the most common way
that hydrogen's made today. About over 90 percent of the
hydrogen in the U.S. comes from that. Or you could even
use nuclear electrolysis.
--o0o--
DR. OGDEN: So the energy use depend on which
pathway you choose for hydrogen. All of them are not
equal. And what we really are interested in in the
vehicle applications is looking well to wheels. So we
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have a zero emission vehicle with hydrogen. That would
also be true for electric. So we have to look at all the
upstream emissions. So you count all the emissions and
energy use involved in energy extraction, let's say in
this case producing natural gas, moving that to a hydrogen
production plant, producing the hydrogen, and trucking the
hydrogen to a fueling station and using it.
So I'm going to now present some comparisons on
this well-to-wheel basis, comparing hydrogen to other fuel
vehicle pathways. So the hydrogen fuel cell vehicle to
some other fuel vehicle pathways.
--o0o--
DR. OGDEN: This is a pretty complicated slide,
and probably study that later on. But there are a couple
of things I wanted to emphasize. I don't know if I have a
pointer here.
Well, but anyway. Up in the top of this bar we
have some -- we have conventional internal combustion
engine vehicles - gasoline vehicles and natural gas
vehicles.
Moving down we get more electrified. We have
hybrid electric vehicles, things like Prius or the other
hybrids that we have.
And then plug-in hybrids and battery electrics.
And then finally at the bottom fuel cells.
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And these are well-to-wheels calculations that
were carried out by the Department of Energy, counting up
all the emissions and making, producing and using the
fuel. So some of these like gasoline of course have
tailpipe emissions. But hydrogen or electricity battery
cars, it's just the emissions upstream of the vehicle.
And we find some interesting things when we
compare this. And I'm going to go to the next slide where
I'll just kind of say in words some of the highlights from
this slide. I also sent I guess to Analisa the back-up
material, and there's a website there if people want to
look at the assumptions more.
--o0o--
DR. OGDEN: Interestingly, if you make hydrogen
from natural gas, which is the most prevalent way it's
made today, you would reduce greenhouse gas emissions
something like 40 to 55 percent compared to a gasoline
internal combustion engine in a comparable car of a
comparable size.
If you go to a hybrid -- gasoline hybrid, the
fuel cell's from natural gas, it's probably 10 to 20
percent lower greenhouse gas emissions well to wheel, and
maybe 15, 25 less than a CNG vehicle.
So the point being is even with hydrogen made
from natural gas, which is a fossil fuel, you still get a
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significant reduction in greenhouse gas emissions well to
wheels.
If we compare now some of the other options on
the chart, if we look at -- let's assume we are using the
U.S. grid mix and the hydrogen from natural gas, battery
EVs would have similar well-to-wheels emissions to
gasoline hybrids and somewhat greater -- a little bit
greater than hydrogen fuel cells. So that's kind of the
average U.S.
If you take California's lower carbon grid mix,
lower carbon electricity, then the well-to-wheels
emissions with battery EVs are a little bit less than
hydrogen fuel cells. But it's higher -- but if you made
hydrogen biomass, the emissions would be higher for the
EV.
So the pathways, you need to compare them
carefully.
--o0o--
DR. OGDEN: But now going a little bit further
into the future. Just one point is that the emissions
from EVs depend on the grid mix. This is a graph that was
put together at MIT and it shows -- up top there we see
California and U.S. grid mixes. And we're comparing the
greenhouse gas emissions per kilometer for different
options.
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Unless you substantially decarbonize from where
we are at the average U.S. now, the average U.S. mix,
which is the endpoint, you don't get much benefit with
electric vehicles versus gasoline hybrids. So you really
need to go to a lower carbon grid to get the full benefit.
--o0o--
DR. OGDEN: That's also true for hydrogen. So
the greenhouse gas emissions depend on the primary energy
source. For fuel cells the emissions depend on the source
of hydrogen. For electric vehicles, they depend on the
source for electricity. Both EVs and fuel cell vehicles
could reach near zero well-to-wheels emission in the
longer term if you make them from low carbon primary
energy sources like renewables, for example, wind, solar,
biomass, or fossil with carbon captured sequestration. It
will take some time to decarbonize those primary sources,
that is, to move to a lower carbon grid and to implement
lower carbon hydrogen.
--o0o--
DR. OGDEN: I'm going to just show, since I don't
have much time left, this is from a study by the Electric
Power Research Institute and the National Resources
Defense Council, showing a reasonable trajectory for
decarbonizing the grid in the U.S. And by 2050 you could
probably cut this by two-thirds from where we are now or
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maybe even more.
--o0o--
DR. OGDEN: Here's a similar thing for hydrogen.
This is based on a National Academy study. We show early
supply of hydrogen from natural gas because that's the
lowest cost way to make it. And in future supply you
bring in biomass and other renewables. And again you
could get this two-thirds reduction.
One more slide.
--o0o--
DR. OGDEN: This is a scenario for low carbon
hydrogen in California that was done by my colleague,
Chris Yang, at Davis and myself. Here we look at
initially -- the little blue area in the bottom is natural
gas. That's how we get started. Then we phase in
hydrogen from biomass and hydrogen from electrolysis with
low carbon sources. And the black line shows the
greenhouse gas emissions' intensity.
So you start out with a system that would be
maybe a roughly 50 percent reduction from a gasoline
vehicle. But you can go to very low by 2050 and even by
2030 according to this scenario.
So bottom line is there's a potential to go very
low emissions with hydrogen and also electric.
Thanks.
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CHAIRPERSON NICHOLS: Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: We now transition.
CHAIRPERSON NICHOLS: Well, let's not.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Oh, sorry. Questions. Sorry.
CHAIRPERSON NICHOLS: Let's give the panel a
chance to answer a few questions, or comment if anybody
has any.
Yes, I think there are a couple of us do. So why
don't I start with you.
BOARD MEMBER D'ADAMO: I'd like to get some
information on cost and economy of scale, not just for
vehicles but distributed generation; and then also for the
production of electricity, looking at the fuel source
issue; and, you know, how many of these need to be built
before the cost comes down.
MR. SHEAR: I think probably our next panel --
some of the folks on our next panel will probably have a
better sense of being able to answer those questions. I
was aware that that question would be raised. But I think
Katrina on the next panel is -- and the others, both on
the high temperature and low temperature fuel cells, would
probably be able the answer those questions.
CHAIRPERSON NICHOLS: Dr. Sperling.
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BOARD MEMBER SPERLING: Yeah, I wanted to make a
comment, you know, partly to reflect to a comment you
made, Chairman Nichols, that resonated with me; and, that
is, California really is a leader, and what we're doing
here is so important, you know. In the hydrogen fuel cell
area of course it's especially important because there's
been a faltering in Washington on this issue. But I mean
our position here is that we're biased -- if I can
slightly adapt your words, Chairman Nichols, we are biased
towards a low carbon future. And, you know, as we've
heard from the panelists, including my brilliant colleague
Joan Ogden - and I'm very pleased to have her here - you
know, we don't really know exactly how this future is
going to play out. We know electricity is going to play a
role. We know hydrogen's going to play a role. We know
biomass. And so the idea that we in California are taking
a role in supporting all of these and making sure that all
of them are part of the solution is so important. And,
you know, the world is watching what we do here.
And so it's just wonderful to see this panel, and
I'm really looking forward to the industry because, as we
just heard, cost is so important in the commercialization
plan. And it's so important that we in California support
industry in making those investments. And so, you know,
we're here as a partnership, and that's why it was great
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to have Jim Boyd here reflecting the partnership with the
Energy Commission. And I would point out in the past that
South Coast Air Quality Management District has played,
you know, a very important leadership role in getting fuel
cells going, especially when our former Chairman was
playing a leadership role there, Allen Lloyd.
So this is wonderful. This is beautiful. I love
it.
CHAIRPERSON NICHOLS: All right. That's great.
I have a question for any of the panelists, if
you'd care to comment. Because I see that the structure
of our presentation today reflects, you know, really a
bifurcation that we have between the stationary and mobile
source applications of fuel cells, which reflects sort of
the way we deal with everything in this business, it
seems, in terms of looking at air pollution sources and
greenhouse gas emissions. There's a stationary world and
there's a mobile world. And fuel cells are fuel cells.
And I guess my question for you is, if anybody
would care to comment on it, do you see synergies between
these two programs and are there ways that we could
benefit from a more integrated approach perhaps than we
have today to get more bang for the buck, if you will, for
our fuel cell program.
Anybody care to --
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CEC COMMISSIONER BOYD: Looks to me like we all
want to comment on this one.
CHAIRPERSON NICHOLS: Oh, okay. Good.
CEC COMMISSIONER BOYD: I'm going to disagree
slightly with you that fuel cells are fuel cells. That's
not -- fuel cells are fuel cells, but the technology of
fuel cells and the fuels approach are different.
Stationary and mobile fuel cells tend to use different
technologies for that reason.
Stationary -- mobile fuel cells are really
brutalized in the field by drivers in vehicles, and so
they have to be incredibly robust. And so there's been a
particular approach in that arena.
Stationary fuel cells are just that, stationary,
and usually not subject to the kind of motion and abuse
that motor vehicles are subject to.
So there have been different approaches.
But there have been and continue to be synergies,
you're right on that point exactly. And in terms of the
fuel source, that's where we come together. I mean as you
saw from Professor Ogden's presentation, they all need
hydrogen. And so where we get the hydrogen from is what
we're all working on. And it may differ for the different
applications, depending upon location and what happens to
be in close proximity.
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Biogas comes from lots of different sources and
it may be better for stationary than for mobile
applications unless it ends up just in the pipeline with
natural gas. And, thus, you have a renewable component of
what we call natural gas or methane, in any event.
So those are my comments. I think there's others
coming in.
DR. OGDEN: I think with use of hydrogen it opens
up some new interactions between the transportation sector
and the electric sector.
One example is what you might call a
tri-generation system. You start with a feedstock, could
be biogas or natural gas, and you can reform that and than
produce heat and power for building and also produce some
hydrogen for vehicles. And I think this kind of setup is
actually being used in the Fountain Valley station.
That's an intriguing way of getting started or for certain
applications.
So I think it opens a whole kind of new
cross-talk between those two sectors in the energy system.
MR. SHEARS: Yeah, and I agree. I mean they're
different technologies, a proton/electron membrane for
vehicles and a molten carbonate and solid oxide,
phosphoric for a stationary generally.
But certainly the reason I want to, you know,
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propose us looking at this Fountain Valley project as we
move forward, especially now that we have the context of
the Governor's distributed generation goals, I think, you
know, I want to explore -- you know, I've talked briefly
with Mike Tollstrup up at staff and the Energy Commission
about thinking about how we could road map to sort of
maximize these opportunities. Right now, there may be
some, you know, fairly obvious sweet spots. But we need
to also be thinking, you know, where things are going to
be 10, 15, and 20 years down the road.
So the synergies aren't necessarily just the
immediate synergies, but be thinking about how we can
incorporate, you know, future synergies into our thinking
and our planning.
CHAIRPERSON NICHOLS: Thank you.
Others?
Yes.
BOARD MEMBER BERG: Could you comment for us, and
on the layman's side of the comments, please. My
recollection when we were looking at the last ZEV and
talking about the future, that battery technology was a
little further but in the end game probably not the
answer, that fuel cells looked more promising for the
endgame. In the last couple of years, how do you see the
technology moving forward? Obviously you're encouraged
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that fuel cells is making great strides. But how do you
see that moving forward in a way towards
commercialization? And do you have a feel for what type
of time frame?
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: I can take that.
I think we'll hear from our panel number three,
the automakers. I previewed their presentations and
talked with them, and they're going to give you kind of a
technology portfolio presentation that shares how battery
electric vehicles, plug-in hybrids, hybrids, other
advanced technologies and fuel cells all play and the way
in which they interact together to meet our goals long
term.
I think you're right, that our presentation in
2009, which talked about battery electric vehicles coming
to the market faster in specific applications but that
long term we saw fuel cell vehicles perhaps being more
cost effective, still holds. But the battery electric
vehicles will fulfill a specific niche, as John mentioned,
the smaller vehicle applications, shorter range trips,
maybe urban environment; where fuel cells have a better
role to play in the larger format vehicles and meeting
longer range needs.
So really to transition our entire vehicle fleet,
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we have to have technologies that meet all the different
needs of our vehicle users. And so battery electrics and
fuel cells both play.
BOARD MEMBER BERG: And then how about in the --
I know I said the ZEV program. But also how about in the
stationary source arena then?
CEC COMMISSIONER BOYD: Let me comment first
on -- Analisa used the magic word that I would use and
want to amplify and, that is, portfolio. And I want to
make it a diversified portfolio.
It is the policy of the Energy Commission and the
energy area in total to strive for and look for a
diversified portfolio of technologies and fuels; and
therefore, her comments were appropriate. There are
different niches for pure battery electric vehicles, for
hybrid electric vehicles that utilize batteries, and for
fuel cell vehicles.
And in the stationary or electricity generation
arena, there remains the same diversified portfolio. It's
a little more obvious with solar and wind and hopefully
more biomass in the future; natural gas, as we know it
today, being supplemented with renewable natural gas. And
we're looking to take advantage of some of the activity in
the vehicle area to help us in the electricity area.
One of the important things -- one of the
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problems we deal with in electricity is the intermittency
of wind and solar, and we need energy storage. And
there's multiple approaches, batteries being one of those
approaches. And we have a very large research project
underway - ITS Davis is involved in it - with regard to
how to use spent vehicle batteries as energy storage
devices, maybe even in our homes eventually to absorb some
of the home-based distributed generation that may be
facilitated in the future.
So there are lots of synergies, lots of
possibilities of crossover here. And it just drives home
even more than in the past the absolute necessity, rather
than desirability, the absolute necessity of our agencies
working together in this arena to look for and discover
these synergies earlier rather than later.
MR. SHEARS: You know, I noted on one of my
slides that McKenzie & Company, one of the leading
international consultants that works in this area, did a
report where they noted on the vehicle side moving out
towards 2020 they expected that the costs -- total costs
for all of the vehicles, battery, fuel cells, advanced
conventional - because conventional vehicles are going to
get even more sophisticated technologically going forward
- those costs of producing those vehicles are expected to
converge.
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Right now, batteries are the most expensive
component in a battery electric and plug-in hybrid
electric vehicle. So batteries in some ways face similar
challenges that, you know, engineers are working on for
fuel cells in terms of - and I note that on one of my
slides as well - in terms of getting the weight down,
reducing the cost, enhancing -- you know, improving the
durability.
Batteries and fuel cells actually were born
technologically around the same time, in the mid-1800s.
And in fact they're related electrochemical technologies.
And a lot of the approaches that are looking to increase
the power of batteries actually make -- if they work,
would make batteries look more like fuel cells. So there
are a lot of parallels that are going on. I'm sure that
the follow-up panel that talks about that, they'll be able
to speak a little more about some of the developments in
those areas.
BOARD MEMBER BALMES: I have one naive question
that you prompted when you were talking about the
differences in technology in terms of fuel cells for
stationary purposes versus vehicle purposes. Could you
amplify, and again in layman's terms, the basic
differences in those technologies?
MR. SHEARS: Probably it would be -- it might be
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better to have one of the other panels speak to that.
BOARD MEMBER BALMES: That would be fine.
MR. SHEARS: Broadly, for vehicles, they're the
class of technology that is used uniformly now for fuel
cell vehicles.
And on the stationary side they use different --
I'm trying to avoid -- they use the key component that
allows you to derive the electricity from the hydrogen.
That component, which is either -- you know, they use a
different catalyst, let's use that phrase, whether they're
using high temperature molten carbonate or a phosphoric
acid or what's known as a solid oxide fuel cell. It's
using a different approach in terms of how it's generating
electricity from the hydrogen feedstock.
There was a time early on where they were playing
around with solid oxides in vehicles. But pretty much all
of the vehicle manufacturers have moved away from that
technology application for vehicle use.
DR. OGDEN: If I could just add something quickly
to that.
One of the characteristics of different kinds of
fuel cells is they have different electrolyte materials
and, you know, cycles, but they also operate at different
temperatures. So the ones that you use on vehicles tems
are actually called low temperatures fuel cells, and they
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may be around 100 C, plus or minus. But some of the
others operate at much higher temperatures, and that's
more suitable for power generation and maybe other --
adding other cycles, molten carbonates and solid oxide.
CEC COMMISSIONER BOYD: You know, one of the
things we get from these high temperature fuel cells used
in stationary applications is the possibility of gaining
other uses from the high temperature, combined heat and
power or combined cooling, heat and power - very strong
possibilities - and actually there are demonstrations of
those going on right now.
BOARD MEMBER SPERLING: Let me put some of this
in perspective though. You know, it would be incredible
hubris for any of us as regulators, academics, advocates
to say we know what 2050 is going to be like, what
technologies are really going to be in place. And, you
know, I think the important lesson for ARB or policymakers
is to make sure that we are supporting and encouraging and
incentivizing those technologies that are promising. But
we don't really know, you know. We have some idea. We
keep learning every year, you know. We know more. We
know more since the 2009 review. We'll know more next
year.
But, you know, we do know that fuel cells and
hydrogen will be part of the solution. We do know that
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batteries and electricity will be part of it. We know
biomass -- biofuels will be. We don't know how much of
each in different regions and different technologies. And
so, you know, I just want to not get us ourselves too
caught up in trying to predict the exact future or pick
winners or losers at this point. We've done a good job of
I think screening out a lot of losers and -- but we've
still got a big list of, you know, potential winners.
So we don't know what the costs are going to be.
We don't know, you know, the performance of these
technologies. There's lots of exciting opportunities.
So I want to make sure that we don't start
thinking that we're so smart that we're going to figure it
all out here. And certainly when we hear from industry, I
know that more thoughtful people in industry are going to
say the same thing. And their challenge is they're making
investments. And so our role is to make sure that we
support, you know, investments that do lead to reducing
oil use, reducing pollution, reducing greenhouse gases.
CHAIRPERSON NICHOLS: Thank you. That's a very
good segue to the next panel.
Thank you all so much for coming and getting us
started this morning.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: We'll turn now to our second panel,
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stationary fuel cell applications. In this panel we'll
hear about how stationary fuel cells are being used in a
wide variety of applications, small and large, and wrap up
our session with a case study of fuel cell units placed in
a retail grocery setting.
And I will say a huge thank you to all of our
speakers today. We had a Herculean effort to bring
together all of these panels. And, unfortunately, we had
one speaker unable to get from North Carolina out here.
His flight just got canceled. And so I will thank you,
Katrina, in advance for giving his presentation as well as
your own.
And we will get started with Katrina
Fritz-Intwala from UTC Power.
(Thereupon an overhead presentation was presented
as follows.)
MS. FRITZ-INTWALA: Good morning. I'm Katrina
Fritz-Intwala with UTC Power.
CHAIRPERSON NICHOLS: Could you move the
microphone up closer to you. The system is -- yeah, thank
you.
MS. Fritz-Intwala: Better?
CHAIRPERSON NICHOLS: Great. Thanks.
MS. FRITZ-INTWALA: I'm Katrina Fritz-Intwala.
I'm with United Technologies Corporation. And the Power
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Division is creating large stationary fuel cells,
transportation fuel cells as well. So today I'm going to
focus on the large distributed generation. I'm also chair
of the Industry Advisory Panel to the California
Stationary Fuel Cell Collaborative, which is co-chaired by
Mary Nichols and Dr. Scott Samuelsen from UC Irvine.
--o0o--
MS. FRITZ-INTWALA: So first, to talk about the
value proposition for large stationary fuel cells for
distributed generation. There's really three pieces to
this. There's the economic value, the technical value,
and the environmental value.
So where there is a high spark spread or there's
a high cost of electricity, low cost of natural gas today,
fuel cells play very well. They can achieve up to 80 to
90 percent efficiency using these large stationary
systems, as John Shears was talking about, in combined
heat and power applications as well as combined cooling,
heat and power. And I'll explain a little more about that
in the next presentation.
So right now the customers, if they see about
three to five-year payback, this will make sense for them
to invest in fuel cells.
Additionally, fuel cells can run in back-up power
mode. So they can produce the power and heat for a
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facility, for a building. I'll show you some of the
different sizes of those systems today. But another
economic value is that they will maintain that critical
load for those businesses that are using these today.
And also there are emergency shelters or places
like schools that can serve as emergency shelters that are
required to maintain those power loads.
The environmental value. As you know, in California
especially, with a lot of your goals related to AB 32,
fuel cells can contribute greatly to the reduction in
emissions. They are virtually pollution free. There is
zero water consumption in producing power from a fuel
cell. And they also are being used in LEEDs buildings
around the country as part of the LEED certification.
--o0o--
MS. FRITZ-INTWALA: So now I want to tell you a
little bit about the different markets where these are a
good fit. So the fuel cells play well where there is a
24/7 demand for heat and power.
So 24/7 supermarkets. There's a lot more new
supermarkets being built that are a larger size, that are
open 24 hours. They have a very strong need to maintain
power so that there is no food spoilage in the event of an
emergency.
Bottling plants, which are high heat process.
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And then mixed-use residential. So the
traditional sense of mixed-use residential where there is
a building that has residential units and retail
commercial space. But other buildings that operate like
that, like a hospital, a university dormitory, a prison, a
hotel, those are all also a good fit.
And then you can also use these for utility scale
generation moving multiple units together.
--o0o--
MS. FRITZ-INTWALA: So today we have 33 megawatts
of stationary fuel cells online in the State of
California. This is the commercial market for deployment,
because of the support from the State of California to
date. We've had great commercial traction at this point.
And those are really installations across the state in
various markets and industries.
--o0o--
MS. FRITZ-INTWALA: So the phosphoric acid power
plants. There's one at St. Helena Hospital in St. Helena.
These systems today have a 20-year system life, with a
10-year stack life. I think that's important to point
out. There has been a lot of progress technically to get
to this point where they can compete with other
technologies.
--o0o--
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MS. FRITZ-INTWALA: Albertson's in San Diego,
which is a grocery store application.
--o0o--
MS. FRITZ-INTWALA: Cox Communications for their
office space and data centers.
--o0o--
MS. FRITZ-INTWALA: And Whole Foods Market in San
Jose, which I'll tell you more about later as well.
--o0o--
MS. FRITZ-INTWALA: The molten carbonate power
plants. Again, these are all the very high temperature
fuel cells. They're installed at Sierra Nevada Brewing
Company; a wastewater treatment plant in Tulare, which
this is a renewable fuel application installation; Cal
State Northridge; and the Sheraton Hotel in San Diego.
--o0o--
MS. FRITZ-INTWALA: And solid oxide power plants,
they're installed at eBay in Silicon Valley. These are
multiple hundred-kilowatt units ganged together for
multi-hundred kilowatt output. And Google in Silicon
Valley as well.
--o0o--
MS. FRITZ-INTWALA: So I quickly want to talk
about the Self-Generation Incentive Program in California,
which is a key policy enabler. This program was suspended
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in January. And the Public Utilities Commission is
currently working to reinstate the program with a new
proceeding. But this has really hindered our commercial
progress in the State of California. This is very
important.
We had a lost traction. There were hundreds of
units being installed. And we have not been able to
proceed with customers this year without that California
incentive. So getting this back online quickly is very
important.
Additionally, the Emerging Renewables Technology
Program, which Commissioner Boyd referred to, is critical
for the small back-up power units as well in getting that
back online.
Thank you.
CHAIRPERSON NICHOLS: Thanks.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you, Katrina.
Our next presentation is from Mike Upp at
ClearEdge Power.
MR. UPP: Thank you.
It's a little bit like the Gong Show, right?
(Laughter.)
CHAIRPERSON NICHOLS: Yeah. That thing is
brutal, I know.
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(Thereupon an overhead presentation was presented
as follows.)
--o0o--
MR. UPP: So I'm going to talk a little bit about
small scale or small footprint fuel cells. They go across
a wide array of applications and industries, a lot of
which Katrina referred to. But I think the one I would
point out is the Japanese model.
Literally there are over 10,000 about 1 kw fuel
cells installed in Japan providing combined heat and power
in distributed mode and -- sorry about that -- providing,
you know, across their whole country. And I think they've
done a very good job of mixing government and industry to
come up with a way to really quickly deploy these units,
and we're going to see that significantly grow.
Also small fuel cells would fall into the back-up
power for telecom towers, as someone was referring to
earlier; baseload heat and power; autos; and for forklift
applications.
--o0o--
MR. UPP: So from a real I guess what I would
call a primer on how a CHP small footprint fuel cell
works, simply takes natural gas into a fuel processor, it
re-forms that into hydrogen. That hydrogen then simply
goes through a series of membranes. People were talking
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earlier about the difference. This is kind of a hybrid
technology between auto and the high-end like UTC fuel
cells. It's about 700 degrees centigrade in that
processor. And it's producing hydrogen that then goes
through a power inverter and is converted to DC power --
or, I'm sorry, to AC power. That AC power is then just
connected to someone's panel just like it was powered from
the grid. And then the heat, that is the byproduct, is
then put through a hydronic system and will heat domestic
hot water, space heating, radiant floor heating. Anything
you're going to use heat for, you can use the heat from
one of these small fuel cells.
--o0o--
MR. UPP: I think for this audience probably one
of the most important things I can talk about is what is
the impact on the environment. Now, doing a number of
these presentations, people always say, "Well, you guys
are not renewable. You run on natural gas." But the
reality is that if you look at a 5 kw combined heat and
power fuel cell, it's going to produce about 90 megawatts
of heat and power on an annual basis. To create that same
amount to the California grid, you're going to use about
6400 therms of natural gas and create 34 tons of carbon.
If you a use a 5 kw fuel cell, you're going to use about
3800 therms. And that is going to reduce your carbon
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footprint by about 37 percent and your fuel cost compared
to the grid by about 40 percent.
--o0o--
MR. UPP: And if you look on a much grander
scale - and the way we like to think about this is kind of
the mid-game, not the endgame for us. But 20,000 5 kw
fuel cells would produce about 860,000 megawatts of power
and about a million megawatts of heat. And the impact on
the environment would literally be taking 240,000 tons of
carbon out of the environment and literally reducing NOx
and SOx to zero.
So, yes, it's not completely renewable today.
But the fact is that if you can reduce the carbon
footprint using this technology tomorrow, or even today,
and reduce it by 37 percent, it's a great step forward.
--o0o--
MR. UPP: I wanted to just take a minute here.
Somebody asked about costs earlier. I thought it would be
very good to be very upfront about what the real numbers
are today, and to also show you by using the same
customer's slide with SGIP and without SGIP.
This first example is with SGIP. You can see
that this customer is going to save about $10,000 a year
by installing this in a high-end residential application.
And their payback is going to be about 4.9 years. And it
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makes the net system cost to that customer with SGIP and
the federal tax credit of about $60,000.
If you take SGIP out of the picture, it increases
that payback by about a year and -- well, let's say a year
and a third. Most customers today on technology
investments are looking for a payback of less than five
years. So the SGIP is definitely an enabling rebate to
the market, if you will, that was causing customers to
buy, and it's now got many customers paralyzed or
canceling orders. So I can't say enough to you about
encouraging you to help get that program back on line.
--o0o--
MR. UPP: I won't read all of this slide because
I've got 13 seconds left. But I would want to hit two
other things on here.
One is, on any energy generation at point of use,
we've got a number of pilot projects going with utility
companies today. And one of the reasons that they're
looking at using our technology is to reduce choke point
on the grids. So instead of having to dig new trenches to
lay high voltage lines to urban congestion points, they're
putting in fuel cell demonstration projects to prove that
they can deliver peak power at the point of use, which
fits right into the whole distributed generation that you
all are trying to prove here in California.
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So with that, I'll just stop talking.
Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you.
Katrina is going to give our next presentation,
which is a case study.
(Thereupon an overhead presentation was presented
as follows.)
MS. FRITZ-INTWALA: Okay. So on behalf of Whole
Foods Market, who could not be here today, I want to talk
to you specifically about their installations in
supermarkets.
So this map shows you how we use the waste heat.
We use both the low grade heat for hot water - that also
is for heating a building - the high grade heat that comes
out of a fuel cell can be run through an absorption tiller
and it can be used for cooling, for refrigeration, and for
freezing. So it causes that greater overall system
efficiency. And we can get up to 90 percent system
efficiency with these fuel cells.
--o0o--
MS. FRITZ-INTWALA: And these are some benefits
that Whole Foods directly wanted me to express to you that
they have been seeing so far in using these fuel cells.
So as I said, they use the processed heat to the extent
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they can use as much as possible to get these
efficiencies.
They also can run in back up power mode. So for
a supermarket, that means that when the power goes out,
they can maintain their inventory. So there's an economic
benefit to that. But there's also a community and
societal benefit because the grocery stores are the places
that need to maintain the food stores in the event of a
disaster or an emergency. Whole Foods most recently
experienced this is the northeast with the tornados and
storms we had go through a few weeks ago. And they had
some systems using fuel cells in stores that stayed up and
running.
Additionally, the decision to use fuel cells was
made by Whole Foods again because of that SGIP in
California.
So I'm going to show you two options.
--o0o--
MS. FRITZ-INTWALA: They looked at a purchase
option and they also looked at a leasing option.
So if you look at the purchase option, the
payback period was 4.9 years. Without the -- and that was
with the SGIP. Without the SGIP, it was ten-plus years,
which meant they could not do it. Now, That still -- the
payback period of 4.9 years still did not meet their
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internal hurdle, their required rate of return.
--o0o--
MS. FRITZ-INTWALA: So we looked at a leasing
option, so what is called an Energy Service Agreement,
which includes everything except for fuel. And what this
allowed us to do is structure this so that they had a
lower upfront cash outlay, lower upfront payments. And
anticipating that the cost of electricity would increase
over time, so will their payments, so it allowed them to
begin using the fuel cell in the store.
Again, this was possible with the SGIP. Without
the SGIP, there still would have been a negative net
present value.
--o0o--
MS. FRITZ-INTWALA: In addition to Whole Foods,
SuperValu is a supermarket company that owns chains across
the country, such as Albertson's. So they also have
chosen to use fuel cells in California at Albertson's
stores. And this is the Albertson's store in San Diego.
These are actual numbers that they're seeing environmental
benefits today.
But they wanted to make sure that -- I expressed
again the importance of SGIP. There's ten stores that
they want to use fuel cells in -- ten additional stores,
contracts that are pending. And without that additional
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California incentive today, they're not going to be able
to do that.
So we have lost, you know, I would say -- by the
time the program's back online, it'll be almost a year of
commercial traction. And that does impact our ultimate
costs and the cost reduction that we can achieve with the
economies of scale.
--o0o--
MS. FRITZ-INTWALA: Okay. Thank you.
CHAIRPERSON NICHOLS: Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: So do we have any questions for this panel?
BOARD MEMBER SPERLING: I have two questions.
I understand the vehicle fuel cell technology and
system pretty well, where there's one fuel cell technology
that's been focused on, the PEM (phonetic) fuel cells.
And most of the major car companies have their own
priority designs. They're on the verge of commercializing
it.
But listening to the presentation on the
stationary, I have some questions. One is, you know, I
heard three different technologies talked about. I
understood that phosphoric acid was no longer considered
an important technology for stationary applications or
other applications, I guess. So I'm kind of curious, is
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there -- what's the sorting out on the technology? And
this is important because it goes to some of the questions
our Board had in terms of the synergies and interactions
between the vehicle side and the stationary source side.
So that's the first question. Let me ask just
that question, and then I have a follow-up.
MS. FRITZ-INTWALA: Okay. Sure.
I would say, you know, the actual material for
the catalyst being the difference in those technologies
probably isn't as important as making sure that we have
options that fit best into different applications. Solid
oxide runs at a much higher temperature. It's a newer
technology, so it's still being developed. Ideally it's
going to be a very high temperature system that can
produce even more thermal benefit and higher efficiencies.
It's not yet there today.
Phosphoric acid. There's been hundreds of
phosphoric acid systems installed around the world, and
there are still cost reductions happening in the
technology. As I said, it's now at a 20-year life. It's
not I guess passe technology. It's a mature technology to
the extend that it's performing very well. There's great
durability, great reliability because it has been in the
field for a longer time.
BOARD MEMBER SPERLING: But that doesn't mean
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it's necessarily promising for the future.
MS. FRITZ-INTWALA: If there are other
alternatives that come to bear that are technically
proving to be more efficient, getting higher efficiencies,
and where we can see a faster period of cost reduction,
yes, absolutely.
BOARD MEMBER SPERLING: Okay. And then the
second question is kind of a reality check on all this.
Where does California and the U.S. fit in all of this?
Who's leading? Where's the markets? Where's the
commercialization? How do we fit into that?
MR. UPP: Well, I would say California is by far
the leader.
Is that microphone on?
Okay. And that was really higher rates than most
of the rest of the country probably except for Hawaii and
the SGIP program. So they were kind of the tipping point
and why you saw fuel cell companies focus on California.
So for us, a relatively newcomer to the
marketplace, our two markets are Korea and California
because of the favorable government outlook on fuel cells.
So those were the drivers. I mean, we certainly see that
there's other states. We just opened an office in the
northeast because there's about five states where they
have that same tipping point phenomenon of high rates and
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relatively good incentives.
BOARD MEMBER SPERLING: And are there any things
that ARB is doing that are particularly relevant and
helpful or not helpful?
MR. UPP: Well, listening to you talk about how
much you are loving this interchange of ideas is very
encouraging to me. Because, you know, I think sometimes
we think we're kind of put off as - excuse my French - but
the bastard stepchild because solar and wind get all of
the -- you know, all of the fanfare, if you will. And we
actually believe that we're very complementary technology
and we're part of the total solution going forward. And
we're seeing, I would say, a number of hybrid
installations where people either don't have enough
rooftop to put enough solar to drive enough power for
their building so they're buying solar and fuel cells. We
have an installation going in at San Diego State
University that actually fits that bill.
So, you know, I think it is encouraging and I
think that -- people also asked about where the costs
going, and I wanted to address that as well. So we have
four people whose whole job is cost reduction. And the
guy who leads that team reports directly to our CFO. So
it is one of the most important technology aspects of our
development, because no one's ever been able to prove you
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can build a small scale fuel cell and make it profitable.
And we've gone from -- literally the first units we
shipped cost $100,000 and we were selling them for 50.
Now our cost of goods is almost break-even. And we
believe that within two years we will actually be, you
know, at a reasonable profit margin. So it's actually
happening, but we've got to get past the brick wall that's
kind of been thrown up with the rebate program getting all
messed up.
MS. FRITZ-INTWALA: I'd like to add to the
response on what the Air Resources Board is doing and
could do.
AB 32 has our customers thinking about what they
need to do in the future. That's what's really important,
the end-users and their plans. Cap and trade, ultimately
we expect to see an uptake in the use of fuel cells for
distributed generation with that.
Just the recognition that the Air Resources Board
has that fuel cells are part of the solution. Not that
they are the one solution, not that we know today where
everything's going to fall out, but that they need to be
considered in this is very important.
And also going back to the fuel side. You know,
more than the technology, the fuel ultimately is going to
be what's important, what fuel's being run through those
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systems. And the development of in-state biogas network
is critical. I mean, all of these different technologies
can run off of biogas today, but it's not readily
available. And the sources that are out today are
contracted already. So we need to continue that
development.
CHAIRPERSON NICHOLS: That's very helpful.
Thank you.
DEPUTY EXECUTIVE OFFICER FLETCHER: Mary, if I
can --
CHAIRPERSON NICHOLS: Oh, I'm sorry.
DEPUTY EXECUTIVE OFFICER FLETCHER: -- I wanted
to add a little bit about what ARB's doing through the
California Stationary Fuel Cell Collaborative. There is
this great collaboration amongst all the manufacturers of
the fuel cells. And the work that Scott Samuelsen, that
you'll hear from a little later, has done to sort of bring
these folks together, and Mike Tollstrup's leadership as
the executive director of that as ARB, I think is helping
to kind of focus on the areas that need to be looked at to
promote the technologies, and there are a lot of
applications that we're looking at to try to get off the
ground. And one of those has to do with the dairy
digesters. And the power generation off that has
historically been IC engines, and we don't like that very
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much. And it's costly as well to control it.
So we are looking to try to get some test
programs on the ground to demonstrate the
commercialization of this technology. And part of it's
not as much the fuel cell itself, it's the clean up of the
gas is probably one of the major expenses there.
So as the efforts go on and the
commercialization, you know, proceeds, we expect those
costs to come down and see really a lot of applications
that could go in in a variety of areas that have multiple
benefits.
BOARD MEMBER SPERLING: Is that an example where
there could be an offset protocol for digesters using fuel
cell technology? I mean is that the --
DEPUTY EXECUTIVE OFFICER FLETCHER: Well, we do
have an offset protocol under cap and trade for manure
management already. And I think the question is how do
you link that into these sorts of technologies that take
advantage of that aspect of it as well.
CHAIRPERSON NICHOLS: Okay. I think Dee Dee was
next.
BOARD MEMBER D'ADAMO: Okay. So this is very
useful. I'm getting a lot out of it.
I'd like to focus on the fuel source of the map
that you provided and then the specific examples, Mr. Upp,
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that you provided. Where would you put the percentage in
terms of natural gas as the fuel source versus biogas or
other?
MS. FRITZ-INTWALA: I actually have the actual
numbers here.
The total -- I'll give it in terms of kilowatts.
The total kilowatts that are installed today that are
nonrenewable is about 12,000 kilowatts; and the renewable
is about 10,000 kilowatts today.
BOARD MEMBER D'ADAMO: How about in terms of per
-- but how many facilities?
MS. FRITZ-INTWALA: How many projects? There's
about 26 facilitates that are nonrenewable and 16 that are
renewable.
CHAIRPERSON NICHOLS: Did you have follow-up?
BOARD MEMBER D'ADAMO: Yeah. I'm just trying
to find -- it seems that - and this is a question - the
cost isn't so bad if you use natural gas because there's
infrastructure and a pipeline system; so the cost goes up
significantly if you have to use another fuel source?
--o0o--
MR. UPP: That's true today, yes. But again, as
Katrina said earlier, long term I think the -- you know,
the real goal we'd like to reach is to be able to run
these on biogas, because then it would be completely
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renewable.
BOARD MEMBER D'ADAMO: And then I'd like to have
a little bit of a discussion on AB 32 and where this fits
in with capped sectors. I imagine there are certain, you
know, like refineries where there wouldn't be an
application. But what about manufacturing, some of the
larger capped sectors versus the -- I'm thinking of food
processors? The number that I've been -- of companies
that I've been talking with where they're sort of hovering
around the edge of falling within being a capped sector,
and the application in those industries. I think it'd be
helpful to see may be an example of meeting AB 32 with
fuel cell technology versus another regulatory compliance
method.
--o0o--
MR. UPP: So specifically, you know, to us the
application is high heat and high power usage. So we
don't try to limit ourselves to specifically a, well,
market that we would try to sell into or install at. It
would be more focused on, does that company use a
tremendous amount of heat and power? So we're actually in
the process of putting together an implementation plan for
a linen company, a uniform company that uses a tremendous
amount of hot water and power to run their facility,
because they're producing, you know, uniforms that they
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drive around and deliver to companies. But I'm not sure
that really fits what you're looking for.
CHAIRPERSON NICHOLS: It's not a second per se.
MR. UPPS: Right.
CHAIRPERSON NICHOLS: It's more of a profile of a
type of business.
MS. FRITZ-INTWALA: Well, some of the sectors I
showed in my first presentation, you know, such as high
heat processing plants, like bottling plants, industrial
pharmaceuticals, would be an example of that. The hotels
and casinos, this mixed-use-residential-type area.
BOARD MEMBER D'ADAMO: Have you looked at food
processing?
MS. FRITZ-INTWALA: We are looking at food
processing, yes.
DEPUTY EXECUTIVE OFFICER FLETCHER: I think that
some of the areas that it can -- it can play a role in a
couple different areas. One of them is the utilities
themselves. To the extent that they're using renewable,
then it plays into 33 percent. To the extent that it's
distributed, it's off the grid. So that's one area where
it can play a role in terms of reducing the amount of
electricity that's generated from fossil sources.
I think in the industrial side on things like
food processors, to the extent that there's an obligation
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that the facility has, they have a certain amount of
emissions, if they install fuel cells in, that reduces
their emissions obligations and, you know, helps them meet
AB 32.
So I think there's a number of different areas
where the applications can play a role, and I think that's
something that we're looking at as well. Again, it's a
situation where the cost needs to come down or the SGIP
program needs to kick in.
BOARD MEMBER D'ADAMO: So it seems that for
businesses that are -- or facilitates that are outside --
undistributed, outside the capped sector, what would
really be driving an interest is just the incentive;
there's no regulatory burden that these facilitates have;
it's just the fact that there's an incentive that's out
there; correct?
DEPUTY EXECUTIVE OFFICER FLETCHER: That's true.
There are also potential for offset consideration -- not
GHG offsets, but emission reduction credits that could be
obtained through the use of them. And we do still have
air quality issues outside of AB 32 and we have been
looking at the potential for, you know, fuel cells to
become BACT, for example, on waste treatment plants. So
there are areas there where, you know, you can start with
the new and than look at whether there's any potential to
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retrofit these to achieve emission reductions on the
criteria side, because they are -- you know, they are very
clean systems.
So I think that's kind of the integration I think
of how the systems play so you get GHG benefits and you
get criteria pollutant benefits as well. So we are
looking at areas where you can use these to replace the
existing power sources and achieve emission reductions
through them.
So I think there's incentives even outside GHG
where fuel cells become really important
CHAIRPERSON NICHOLS: I think after today we're
all going to go away with some thoughts about ways in
which we might be able to integrate this better into a --
integrate fuel cell thinking better into our overall
program. And that's hopefully part of the benefit of the
presentation.
I would like to just --
BOARD MEMBER D'ADAMO: I'm sorry. One last --
just an update on the SGIP. I'm not that familiar with
it. Is there interest in renewing it, and at what level?
DEPUTY EXECUTIVE OFFICER FLETCHER: Well, I might
ask Mike Tollstrup to come up and explain it, because I'll
probably screw it up.
But basically it's a program that incentivize
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small generators. And it was a program in place where
there was a fair amount of money but it became sort of
oversubscribed. And so the money was basically -- the
program was halted while the Public Utilities Commission
went through and kind of is reassessing the criteria for
application on the SGIP. So that is in process. I'm not
sure exactly what the timing is. Katrina probably can
answer that question.
CHAIRPERSON NICHOLS: Mike is coming to the
rescue.
DEPUTY EXECUTIVE OFFICER FLETCHER: And there's
Mike to bail me out.
But that's generally what the program is.
PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: Yeah,
as Bob mentioned, the program is currently on hold. And
it's been on hold since about I think it was last December
when the PUC put it on hold. Staff has been working on a
new proposal. We expect to see something come from the
Public Utilities Commission, hopefully this month, but
maybe next month. And then there's some delay before the
program actually gets off the ground and starts, you know,
getting the dollars back out there.
But it is in process. There are a number of
bills also that will affect the program. The funding for
the program is basically done, unless another bill, you
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know, reinstitutes the funding for it. So we're waiting
for one of the legislative proposals out there to take
effect and reinstitute that at least for another year or
hopefully longer.
But there is a lot of work going on, and we
expect it to kick off here soon and the legislation to,
you know, basically bring the funding back to the program,
you know. But it will be almost a year since the program
went on hold, and it has had a significant effect on fuel
cell installations.
CHAIRPERSON NICHOLS: It's always really a big
problem when we have these stop-start programs. And it's
too bad we weren't aware of it earlier and in a position
maybe to be helpful. I don't know if we could have been,
but we could have at least been part of the discussion.
John.
BOARD MEMBER BALMES: Well, just a follow-up
question. So where did the funding come from for the
program before it had to stop?
PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: It
was funding through the CPUC. So it was ratepayer based.
It was about $80 million a year that was given to the
program and distributed for certain technologies, the
start of the solar. And they got -- you know, they went
to another program. And now it's currently available for
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wind and fuel cell projects. You know, some of the
changes that's taking place, they will open that program
up. And there will be other technologies like storage and
other technologies that can meet our distributed
generation standards will have access. But it is about
$80 million a year that has been distributed and has been,
you know, effectively distributed every year.
CHAIRPERSON NICHOLS: But surely the thinking is
going to be how to integrate this more into the bigger
agenda for distributed generation. And that could cause
things to take even longer if we don't really bend
people's attention to getting something done here.
Go ahead.
BOARD MEMBER BALMES: And then just one follow-up
question to Mr. Fletcher's comments.
So both Ms. Berg and I were trying to remember,
do we have any early credits with regard to greenhouse gas
emission reduction in AB 32 at all?
DEPUTY EXECUTIVE OFFICER FLETCHER: Well, there
are some opportunities for early reduction credits. I
don't believe this is one of them. In fact, it isn't one
of them.
MR. UPP: I had one more thing on SGIP.
CHAIRPERSON NICHOLS: Yes, please.
MR. UPP: So to break it apart too, what Mike was
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referring to is that the plan is funded through this year,
so they're actually collecting the ratepayer funds and
they're accruing. It's just the program is on hold. And,
you know, you have to be very forthright with your
potential customer and let them know that they may or may
not get it because there's no guarantee yet because they
don't know what it's going to look like.
Then on the secondary level, it's now just passed
to the Senate, but there was a bill that was passed that
extended the right -- or the ability for the PUC to
collect funds through one more year. I actually just had
a meeting yesterday with Assemblyman Perez, who is the one
who's actually driving the bill. He is trying to get that
increased to three years so you don't have to go through
this, you know, limbo period every year. Because it's
definitely -- like I said earlier, it's causing a crimp in
the system. So if you're inclined to reach out to
somebody in the Assembly, it's Assemblyman Perez who is
the main person.
CHAIRPERSON NICHOLS: This is not the Speaker but
the --
MR. UPP: Yeah, Manuel Perez from the Coachella
Valley in southern California.
CHAIRPERSON NICHOLS: Right. Great. Thank you.
Our legislative director is sitting in the
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audience and she's paying close attention. So she'll
follow up. Thank you.
All right. I think that's -- we are, as usual,
running behind because we're too interested and asking
questions.
But thank you all very much.
And we'll bring on the next panel.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Okay. Panel No. 3 will have a motor vehicle
focus. We're shifting gears literally. We'll start with
a presentation from a fuel cell manufacturer to give us an
overview of the core technology status and then move to a
series of presentations from the automakers about their
experience, plans, and needs relating to fuel cell
commercialization. Finally we'll hear from our fuel cell
bus demonstration partners at AC Transit to give you an
update on the zero emission bus demonstration project in
the Bay Area.
So we'll start with Andreas Truckenbrodt from
Automotive Fuel Cell Corporation.
MR. TRUCKENBRODT: Well, thanks, Analisa and
Chair Nichols and Board members. Thanks for giving me the
opportunity to speak. I have a nice presentation.
(Thereupon an overhead presentation was presented
as follows.)
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MR. TRUCKENBRODT: While it's loading up, AFCC is
a joint venture between Daimler and Ford based in
Vancouver. I have five minutes, five slides, five
messages. And I will definitely speak about cost, because
that of course is one of the most important issues.
--o0o--
MR. TRUCKENBRODT: Message No. 1 is: Fuel cells
are an indispensable element of the mainstream automotive
powertrain portfolio because all the benefits, like they
are zero emission, they are independent from oil, the
efficiency is twice as high as the internal combustion
engine, we do not need to enter compromises in range or
refill times, and the customer is pleased because he has
all the comfort of pure electric driving.
And we've heard that key word "portfolio" before,
and you will hear it more I guess from all of our speakers
here because the fuel cell construct's a very important
element of the whole powertrain portfolio. The battery
electric vehicle plays an important role in the
application of urban mobility. But the fuel cell being
able to power larger vehicles and not having the range
limitation is suddenly a major element.
--o0o--
MR. TRUCKENBRODT: Message No. 2: The fuel cell
vehicle technology is ready for the customer today. We
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have made -- since the first vehicle in 1994 we've made
significant progress in materials, concepts, in the
analysis and simulation tools, in the vehicle integration.
We have as an example reduced the use of platinum
significantly to levels where -- which are comparable to
exhaust catalysts. We will work on new catalysts.
And the vehicles that you will find, that you can
see later today, they are absolutely competitive with
conventional vehicles in terms of the power, in terms of
range and consumption, in terms of free start. They can
start up to minus 15 Fahrenheit or even lower. And
durability, we have reached the goal of more than 2,000
hours. Buses have proven to be able to run 10,000 hours
with no problem.
--o0o--
MR. TRUCKENBRODT: Message No. 3: There is one
challenge remaining, and that is cost. And we are on a
clear and realistic path to get the cost down to be
comparable and equal to advanced conventional vehicles.
And as you can see on the chart, the benchmark is
the hybrid, maybe a diesel hybrid. We are at low volumes
still significantly off there to date. But the levers we
are using are economies of scale, of course; manufacturing
will play a very important role; and this whole thing of
supplier development industrialization is a major element.
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And on that chart on the left bottom you'll see
that in many of the fuel cell components we are in areas
where we are first to industry, whereas conventional car
components -- vehicle components are well proven, you have
lots of competition and suppliers. So we are getting
there.
There is a lot of technologies that we are
working on and we know how to get there in the technology
side for the stack; catalyst; membrane; plates; for the
tank, another important element; and the power
electronics.
--o0o--
MR. TRUCKENBRODT: Message No. 4: These are just
the goals. Can we get there? And there are many studies
out there.
On the left side you have the latest results from
the DOE merit review just recently in Washington, how the
costs of the fuel cell system is coming down to a target
of $30 per kilowatt. This, by the way, are 2002 numbers,
whereas the other dollars are actual dollars. So that 30
translates to 42. We are at 51 in this prognosis now, and
there is still with the measures I explained a good chance
to get there -- or we know we will get there.
I would also like to draw your attention on that
chart on the bottom right. We also know, and this is not
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only -- this is not only us, this is many studies, that
fuel cell electric vehicles can even beat the battery
electric vehicles in terms of cost. So ultimately the
fuel cell electric vehicle is the less expensive zero
emission solution. But, as mentioned before, battery
electric vehicles have their value of course in the urban
mobility.
--o0o--
MR. TRUCKENBRODT: And my last and fifth message
was: The level of the technology where we are and knowing
that the cost is going to achieve the target, the OEMs are
definitely committed to begin commercialization in 2015.
We need, however, the commitment from all the other
stakeholders as well. That is the suppliers, that is the
research institutes and universities, that is government.
And I do not mean we don't have the support there. But it
really requires the involvement and commitment from all of
those. We also need infrastructure, but we know that.
The California Fuel Cell Partnership is a great
example how these stakeholders can work together. And we
really appreciate the big support and the active
participation of the Air Resources Board in the
partnership.
Thank you.
CHAIRPERSON NICHOLS: Thank you.
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SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Our next presentation will start our
presentations from car companies. We'll start with
Stephen Ellis, American Honda Motor Company.
MR. ELLIS: Thank you. And while the slide's
cueing up, my name is Steve Ellis, Manager of Fuel Cell
Vehicle Sales and Marketing, the American Honda based in
Torrance, California.
Let me run through a few slides and provide a few
key messages about what Honda's been doing.
(Thereupon an overhead presentation was presented
as follows.)
MR. ELLIS: The FCX Clarity we introduced in the
market in 2008. We're coming up on three years of leases
to real-world customers in the market.
--o0o--
MR. ELLIS: This slide shows the Honda portfolio
approach of vehicle technologies toward near zero and zero
emission vehicles, with fuel cell electric vehicles - a
long history there, since 1995 - of battery electric
vehicles, plug-in vehicles, hybrid electric vehicles, and
even our natural gas vehicle -- natural gas Civic, which I
would add also benefits -- as a technology that benefits
from investments and work in biogas.
--o0o--
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MR. ELLIS: On fuel cell vehicles we've been
asked to provide answers to a few questions, one of those
about why fuel cell vehicles.
Certainly the major issues are climate change and
energy sustainability, shown in number one, where fuel
cell vehicles provide high efficiency and decarbonized
fuel. Others have spoken to this.
But on the transportation value side, I think
what's becoming better understood is the compelling full
function capability of fuel cell electric vehicles over a
wide variety of vehicle platforms.
So toward greenhouse gas reduction, like here it
says 80 and 50, this is a technology that will play a
significant role; and certainly with petroleum reduction,
with no use of oil.
--o0o--
MR. ELLIS: On the greenhouse gas side, a lot has
been said about that. But in this particular slide,
putting emphasis on the GREET model as kind of a
standardized way of measuring the well-to-wheel value of
vehicles and their contribution to greenhouse gas.
Just focusing on the two green arrows pointing
downward, the point being that whether it's a battery
electric vehicle or fuel cell electric vehicle, both can
provide zero well-to-wheel emissions both at the vehicle
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side and at the fuel side based on that contribution of
renewables.
--o0o--
MR. ELLIS: Honda's activity today. Just let me
cover a few things with where we're at. Customers have
been operating the cars continuously since July of 2008.
Now, this is the FCX Clarity, because prior to that we had
fleet-based programs, we had cars in the hands of various
fleets, including the City of Los Angeles, and we learned
a lot through that.
Now we have real-world customers, paying $600 a
month in a three-year lease of the vehicles, that wake up
everyday and expect the car to provide the value that
they're used to from vehicle transportation.
So a few quotes here. One customer said, "The
excitement of driving has not gone away. I'm so grateful
to have been selected to drive this amazing car."
And another recently said, "Hey, Steve, I sold my
brand X luxury car. The Clarity is meeting all of my
daily transportation needs."
So I think this kind of reflects this voice of
the customer that may have -- they may have gone into it
with uncertain aspects of how it was going to provide
value to them, but it's exceeding their expectations.
Customers are consistently going 200 to 220 miles
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real world between refueling. They have quite a varied
commute. We have some customers with 40-mile one-way
commutes, 80 miles per day and fueling every two to three
days. Others are driving all over the LA Basin, including
taking trips to Victorville, some business owners. That's
their job is driving around southern California visiting
work sites.
The navigation system in this car, it was a
world's first when we put the hydrogen stations in it.
Using voice command, the customer says, "Find nearest
hydrogen station." And it pops them up using a GPS
location base.
We do updates to that as the stations develop.
But it also points out to the customer this focal point of
slow station development. They don't see the changes
coming as rapidly as they would wish.
But we also collaborate very closely with the
fuel cell partnership: Of course the State of
California - CEC, ARB - other automakers and hydrogen
providers in a very credible and ongoing manner for
developing a model for both where stations should be
developed, the capacity of those stations, and the timing
of those stations.
--o0o--
MR. ELLIS: This slide kind of summarizes what's
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becoming better understood, which is the great value of
this full functionality of fuel cell vehicles. A 240-mile
available range, customers are taking routine trips to
Santa Barbara, San Diego, and out to Palm Springs, all on
one tank of fuel, and of course recharging time in less
than five minutes.
--o0o--
MR. ELLIS: So the challenges, work in progress:
On the vehicle side we're continuing cost reduction -
you've heard that - and progressive steps toward
deployment.
But the market preparation maybe is the bigger
task and hurdles, and we're not going to get into that.
But I think you can see there's a lot of work to be done
there. So the collaboration with the Fuel Cell
Partnership, universities, and government is critical at
this time.
--o0o--
MR. ELLIS: Early markets and infrastructure.
I'm just going to summarize this by saying, when we
launched the program, we announced three key cluster
markets. It's only been within the last month that we've
been able to exercise the middle one, which is in
Torrance, because of a lack of stations. Now with the new
what's called pipeline station, we will be able to
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exercise customers in that market.
--o0o--
MR. ELLIS: This is a picture almost three years
ago of one of our customers refueling at the UC Irvine
station. This was a research project station. A single
hose dispenser -- a single dispenser at that operation.
So if one of our other customers pulled up at the same
time, they had to wait - not a long time, five minutes at
max - but they had to wait for the other car to refuel.
--o0o--
MR. ELLIS: Fast forward to today. This is the
Torrance pipeline station. We have multiple dispensers,
multiple hoses per dispenser, and independent control
systems. So simultaneous refueling of four fuel cell
vehicles can be done here. This is a world's first. But
I think it also points out just, you know, how far we've
come but also we're at the early stage of seeing this
occur.
--o0o--
MR. ELLIS: We're delivering through dealers.
--o0o--
MR. ELLIS: In summary, we've learned valuable
lessons, market force lessons, lessons from early station
diversity.
But I think the bottom line is listening to our
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customers. Their number one request is more stations. We
do need accelerated hydrogen station deployment. We hope
that you trust the voice of our customers that we bring to
you and trust the collaborative effort of the OEMs and
hydrogen providers for station needs.
Thank you.
CHAIRPERSON NICHOLS: Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you, Steve.
Our next presentation is from Rosario Berretta
with Daimler.
(Thereupon an overhead presentation was presented
as follows.)
MR. BERRETTA: Good morning. My name is Rosario
Berretta and I'm responsible for the vehicle deployment
here in the U.S., especially in California. Thank you so
much for inviting us and to speak about fuel cell
activities here in North America.
--o0o--
MR. BERRETTA: With the first slide I would like
to show you a portfolio of different technology where we,
as Daimler, are working in different fields. As you see
on the left side, you see the combustion engine in the
middle, you see the hybridization of ICEs, and on the
right side the zero emission vehicles which are
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represented by fuel cell and battery electric cars.
So we still believe that the combustion engine
has a long time to go. We can increase efficiency. We
can increase also the pollutants -- or to increase the
beneficial of, you know, lowering pollutants.
So if you want to go a further step to increase
the efficiency, you have to make hybrid out of it. You
have different kind of hybrid. You have the full hybrid,
the range extender, the plug-in hybrid.
But if you want to achieve something which is a
really zero emission vehicle, you have to go with the
electric one, and it can be done just by battery or fuel
cell.
--o0o--
MR. BERRETTA: So the next slide shows -- it's a
very, very interesting one because it shows, you know, the
strengths of all the different drivetrains.
The first -- you see there is different
scenarios. You have long distance, interurban
application, or city traffic. So you see the first three
arrows is mainly the combustion engine. And it's nothing
new, that they can go really from long distance,
interurban, and city traffic. It's not a big problem.
But you see that the range on driving with those
cars just only from zero emission is really -- it's small
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with hybrid drive, it's a little bit more with plug-in and
range extender. But only electric cars, like with
battery -- which is powered by battery or fuel cell can go
the full range, you know, by zero emission.
And you see also the difference between battery
electric cars and fuel cell, that battery is more -- you
know, more can be applied for city traffic or interurban,
and the fuel cell can go really for a longer range.
And I think important to say here is also that we
as a car manufacturer - and as Professor Sperling was
saying also before - we don't pick the winner yet. We
know they have different advantages, you know, the
different drivetrains, but we don't want to -- we don't
want to choose right now the winner. And if we want to
achieve, you know, by 2050 80 percent of CO2 reduction,
the only way to do it is to increase the number of
electric-powered vehicles, fuel cell and battery electric
cars.
--o0o--
MR. BERRETTA: We started with our fuel cell
activities more than 15 years ago. And so we showed
different fuel cell cars, different prototypes, different
demonstration vehicle.
And so we were able this year to start the world
drive where we can showcase, you know, the maturity of the
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fuel cell technologies; and the same time to showcase also
the advantage of short refueling and long range of those
cars. We were able to start in Stuttgart, and we drove
around the world with three vehicles driven by journalists
in 125 days and so we could showcase to the world that the
technology is ready, it's there.
The only thing what we need here is the
infrastructure. We were able to refuel our cars with a
mobile refueler, which could, you know -- which could
charge in up to three minutes. But what we need in order
to bring those cars into the market, we need definitely
more hydrogen station.
--o0o--
MR. BERRETTA: And this is why we're trying as a
car manufacturer in Germany to promote the infrastructure.
We're going to build together with Linde more than 20
stations, providing money to build these stations in order
to kick-start the rollout of the infrastructure. And we
expect to get also some subsidies also from the German and
European government.
--o0o--
MR. BERRETTA: Where we are here in California
you see the different stations in green which are on line
right now. Only two of those we can use right now. All
the other, because of technical problems, are not
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operational.
The blue ones are stations which will go on line
in a few months.
But it shows exactly that we need more stations.
We have the cars. We have 5, 6 cars right now in customs,
and we have 20 cars waiting. And our sales division is
hesitating right now to give them to the customer because
no station are ready to go right now. Just only two, the
one in Irvine and the one in Torrance, the pipeline
station.
--o0o--
MR. BERRETTA: So regarding challenges, I mean
technology and cost-wise we think we will be there. The
infrastructure is the main focus and it should be in the
future.
--o0o--
MR. BERRETTA: So regarding the cost, I think
this is a slide which Andreas Truckenbrodt already showed
before. Between the A and the B class we were able to
reduce costs. And we will be able to, until with the next
generation, 2015, to reduce costs and bring it to a level
where the hybrid vehicle is today.
--o0o--
MR. BERRETTA: My last slide Is regarding our
next program, the B class. And as I said before, we have
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already six cars in customers' hands. And we will lease
these vehicles for 24 months, 849 per month, which
includes the service and fuel and also the insurance.
Again, we have already cars. What we are waiting
now is to hand over the next cars to the customer as soon
as we have more hydrogen station available.
Thank you.
CHAIRPERSON NICHOLS: Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you.
Our next presentation is David Tulauskas with
General Motors.
(Thereupon an overhead presentation was presented
as follows.)
MS. TULAUSKAS: Thank you. And for the record my
name is David Tulauskas. I'm the Regional Director for
State Government Relations based here in Sacramento. It's
a pleasure to be here.
I will cover briefly our strategy for advanced
propulsion technology and then get into the details on
providing an update on our fuel cell program.
--o0o--
MR. TULAUSKAS: So simply put, our advanced
propulsion strategy is to develop and deploy a portfolio
of technologies. There is no silver bullet to solving
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today's climate change and energy security challenges.
And as a global company operating in countries all around
the world, there's likely -- each country will likely
require a different solution to their challenges.
At this point, there's no clear technology
leaders. So GM has been and continues to invest billions
in everything from incremental ICE's efficiency
improvement to electric motors, advanced batteries, and of
course fuel cells.
--o0o--
MR. TULAUSKAS: Customers have different mobility
and transportation needs. And one advanced propulsion
system may meet the needs better than another, depending
on the customer's needs. So in other words, a small
battery electric vehicle may be ideally suited for urban
areas where driving distances are shorter and traffic is
generally stop and go. Fuel cells provide -- are better
suited for larger vehicles, longer distances, and more
varied duty and driving cycles.
--o0o--
MR. TULAUSKAS: A friendly face here, just to let
you know that our Project Driveway, which is the world's
largest fuel cell fleet demonstration program, including
over a hundred vehicles, has achieved approximately two
million miles and counting. And it's done that in over
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five different countries, and has been refueled --
successfully refueled over 25,000 times.
There's three distinct aspects to our Project
Driveway. And some of it's been in parallel, some of it's
been sequential. But basically the first one is just
getting the technology out and doing your basic technology
demonstration program.
There's also been a group of these vehicles that
have been a run-to-failure type program as part of this.
And we've gained a lot of learnings in both, the basic
technology demonstration program and this run to failure,
which these vehicles are still going. They actually
haven't failed yet.
And then, finally, the third part, and really our
final phase, is to transition these vehicles into
production-ready type vehicles, production intent. So
these vehicles are becoming mule vehicles for production
intent components, controls, and software. In other
words, really close to being production ready.
And in summary, you know, our fuel cell
technology is ready. We've got it on the road today.
--o0o--
MR. TULAUSKAS: And this is just a quick picture
to say that, you know, it's further proof that the
technology is ready and it's meeting diverse customer
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needs.
--o0o--
MR. TULAUSKAS: GM's doing a lot of work, and a
lot of people don't know this, but right here in
California. We've been doing advanced vehicle and
powertrain work in Torrance, California for over two
decades, including work on the EV1 and more recently on
the Chevrolet Volt. And GM's investment in the Volt,
particularly the motors, controls and batteries, have
helped tremendously in getting the fuel cell technology
production ready. And GM continues to do this work here.
We're growing. And this is just a picture of our facility
that we -- a new facility that expanded our footprint in
Torrance, California, June 9th.
CHAIRPERSON NICHOLS: My picture isn't there.
MR. TULAUSKAS: Well, I wasn't sure if I should
put that one in or not. Kept it neutral.
--o0o--
MR. TULAUSKAS: A little bit about our production
intent design. A lot of critics talk about fuel cell
technology, saying it's too far from commercialization and
it's way too expensive. In less than five years, GM has
cut the size of its fuel cell propulsion system in half,
significantly reduced its weight, the number of parts and
the use of precious metals, and at the same time
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significantly increased its durability and its ability to
operate in extreme weather conditions. We've been testing
in minus 40 degree weather up in northern Canada for over
three winters now.
So GM doesn't necessarily agree with the critics
on technology readiness and we have seen significant
progress on the cost issue.
And this next slide will go into a bit more
detail on that cost.
--o0o--
MR. TULAUSKAS: And through additional cycles of
learning and by economies of scale, you know, we're
estimating that we'll be on par in terms of cost parity
around 2020, 2022. And we've gone from 2000 and really 9
and 10 to being approximately 11 times more expensive. So
in ten years we'll see that cost be reduced significantly.
--o0o--
MR. TULAUSKAS: Some remaining challenges, really
threefold, related to cost, but we call it cycles of
learning. We just need to get the product out there, we
need to accelerate the new models, and we need to achieve
economies of scale.
The next one is infrastructure investment,
continue to need to expand that. In a couple years this
will no longer be a chicken or egg issue. The vehicles
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will be there. It will simply be an elephant in the room
needing to be addressed - infrastructure.
And then finally government policy. You know, at
times it, especially at the federal level, has been
unclear and/or there are some policies that are lacking
and we're working collaboratively to put those in place.
--o0o--
MR. TULAUSKAS: And in summary, the fuel cell
technology for automotive application is ready. But we
need the infrastructure there to really drive the vehicle
sales. As the Clarity is experiencing, and Mercedes, they
can only get a very, very limited number of vehicles out
there until the infrastructure is expanded.
And then, finally, stable government policy is
key. And California has been doing a wonderful job, has
made a lot of investments in its infrastructure, but more
needs to be done.
Thank you.
CHAIRPERSON NICHOLS: All right. Thanks.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you, David.
Before I move on to our next presentation, I did
want to note that these are not the only car companies
with very active and progressive fuel cell programs. We
had to make a choice who to bring into our panel. So I
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want to give recognition to the other car companies, which
are making significant progress.
So now we'll turn to our transit bus program with
a presentation from Jaimie Levin, Alameda-Contra Costa
County Transit.
MR. LEVIN: Jaimie Levin, Director of Alternative
Fuels Policy for AC Transit.
I want to go on record noting that the challenge
is not fuel cells. It's the five minute limitation on
this presentation. But I'm going to give it my best.
(Thereupon an overhead presentation was presented
as follows.)
MR. LEVIN: So our first generation buses, which
launched in 2006, the numbers are there. We carried over
700,000 people. But I think what's important is to note
that we improved our fuel economy by 1.6 to 2 times better
than the conventional diesel bus. All the while we were
reducing greenhouse gas emissions significantly using
natural gas as our source of hydrogen.
--o0o--
MR. LEVIN: The third generation vehicle that
you'll see out front and that we're now using is
significant in a number of different ways: 5,000 pounds
lighter. We have a much better battery system on board.
That was the Achilles' heel of our earlier generation.
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We're racking up a lot of miles, a significant number
here, is that we have greater than 9400 hours of fuel cell
hours with no failures, no repairs, and no degradation in
power. And that fuel cell keeps marching on every day.
We're anxious to see that it continues to grow beyond
10,000 hours.
The UTC Fuel Cell Fleet, which is more than just
our buses but other buses elsewhere in the U.S., now has
over 600,000 miles. And in the Bay Area, we've carried
now over a million people on our fuel cell fleet.
Let me qualify the last bullet with a couple of
personal biases. Number one, I'm a daily transit user. I
am a passenger. Number two, I have a Class B license and
I drive the fuel cell bus, not in passenger service, but
whenever I get the chance to drive it. The quote here
that refers to "Like Disneyland in the Real World," that
came from a Golden Gate Transit driver with over 30 years
experience who also drives diesel hybrids.
We are talking a lot more than just cleaning up
the air and reducing emissions here. These vehicles are
extraordinary performers. We're changing the industry,
the transit industry, the image of public transit. And I
hope you'll get a feel for that.
Some of you -- I know Mary has been on the bus as
a passenger. They really are quite remarkable.
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I'm not a mechanic. We do have mechanics here,
and they will tell you how enthusiastic they are working
with this technology as I am talking about it.
--o0o--
MR. LEVIN: Here's some numbers from the fuel
cell side of this. We're looking at availability of the
vehicles. And here you're looking at a 95 percent average
over the last couple of years. We look for 85 percent as
the required pullout for our buses. This is fuel cell,
not the entire bus. But we are looking at numbers that
are approaching 85 percent on availability.
In terms of miles between road calls, again, if
you look at a diesel propulsion system for AC Transit,
it's about 10,000 miles between road calls. And you look
at these numbers with the fuel cell, and they're way off
the charts. That dip that you see is just reflective of a
small number of vehicles in service at early stage. And
all we need is one road call and so the number dips down.
--o0o--
MR. LEVIN: UTC is already making major strides
with FTA and CalStart in reducing the size, the weight,
and the cost while increasing power density and
durability. So there's major strides being made on the
fuel cell side.
--o0o--
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MR. LEVIN: The Bay Area program which CARB has
funded, the California Energy Commission, MTC, FTA, and
our local air district, is expanding this by 12 buses.
It's a $65 million program. We're building two stations.
We can't wait to show you the station that we're soon
opening in Emeryville that the Air Resources Board is
supporting.
Shared training and driving with our other
operators. Golden Gate Transit will begin operating buses
across the Golden Gate Bridge to San Francisco here in the
very near future, in August.
--o0o--
MR. LEVIN: We continue with DOE supporting the
NREL evaluation of this program.
--o0o--
MR. LEVIN: The key technology thresholds are:
Performance. And we're showing that. I've
spoken to that.
UTC reducing the packaging.
And the fuel supply, we're going to demonstrate
five to six minute fueling times per bus up to 12 to 25
buses. We're scaling that up significantly from what we
started with. And we're using both solar power to produce
a third of our hydrogen and we're using a stationary fuel
cell fueled with directed biogas to provide a third of our
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fuel at our other location.
Since everyone else took at least another minute,
I'm going to do that.
CHAIRPERSON NICHOLS: You can do that. Go ahead.
--o0o--
MR. LEVIN: But for a transit system, the real
question's affordability equals ownership. And we've got
to drive down the cost of buying these vehicles, which are
over $2 million a piece. We have to be able to prove
performance and maintainability. That's, can we afford to
run it? And then of course the durability of the
technology.
--o0o--
MR. LEVIN: We are moving down that pathway. The
upper part of this chart shows what we are doing now to
prove technology.
The lower half is reflected in a report --
industry-based report that was submitted to the Secretary
of Transportation, Ray LaHood, that we are having
continuing discussions with his staff. And in fact in
July we are meeting with his chief policy advisor, Paulie
Trottenberg, to discuss how to roll out this program on a
national basis through these Centers of Excellence
deploying more vehicles while driving down costs.
--o0o--
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MR. LEVIN: My last slide is based on the
industry projections of where we can get these buses down
below a million dollars each at a unit number of -- or a
production number of 400. We produce now in this country
4 to 5,000 new transit buses a year. And this is a small
number in comparison to that. We are proving performance.
But it's all -- and what everyone else has said, it's all
in volume. We've got to drive up volume. And in transit
where FTA and the federal government covers 80 percent of
our capitalization cost, they need to step up in order to
drive this cost down. And this is our future. There is
no question about that.
Thank you for giving me the extra two minutes.
CHAIRPERSON NICHOLS: Thank you.
I know we're going to move on to the
infrastructure panel, and you've all kind of set the stage
for that very well. I recognize that this is a sampling
only of people who are working in this space for fuel cell
vehicles. But it does give us at least a bit of a taste
of what's already going on out there in the marketplace,
and it's very inspiring. But we are really on the cusp of
something much bigger and clearly at a point where some
important decisions need to be taken, not just by us but
by others. I think we do have a role to play,
particularly because of our standard setting role. So we
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needed to have this information.
And we appreciate all of you living within -- or
almost within at least the constraints of time that we
gave you.
But if Board members have any specific questions,
we can probably catch up with you also downstairs when we
do the visit to the displays, because I assume you'll be
available then as well.
Okay, great.
Then I think we'll just move on to the next
panel. And thanks very much.
Infrastructure.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Okay. Our final panel focused on
infrastructure will I hope put it all together.
We've learned from the stationary fuel cell
presenters that there are real-world applications with a
variety of benefits to be had. And we've heard from the
automakers that they need hydrogen stations.
We'll start this panel with a summary of just how
fuel cell commercialization is forecasted to grow, and
follow that with presentations from two of California's
leading hydrogen infrastructure providers.
Finally, we'll showcase a project that we have
helped co-fund that brings it all together in one system.
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And there are several presenters who have alluded to this
Fountain Valley project, which uses biogas derived from
waste water to produce electricity and heat for the
treatment plants and provides hydrogen for vehicles.
So we'll start with a presentation from Justin
Ward, who is California Fuel Cell Partnership's Vice Chair
and also represents Toyota -- works for Toyota.
(Thereupon an overhead presentation was presented
as follows.)
MR. WARD: Thank you very much.
As she mentioned, my name is Justin Ward. I'm
the Vice Chair of the California Fuel Cell Partnership.
I'm also the advanced powertrain program manager at Toyota
and responsible for our fuel cell and electric vehicle
development.
--o0o--
MR. WARD: Today I'm going to give kind of a real
brief overview of what the California Fuel Cell
Partnership is doing with regards to fuel cell vehicle and
hydrogen station rollout planning. We're very active in
this space and really supporting my industry towards the
commercialization of fuel cell vehicles.
--o0o--
MR. WARD: One of the things that the partnership
always gets asked, and we get asked this I mean literally
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every day, is, you know, how many hydrogen stations does
it take really to kick off the commercialization of fuel
cell cars?
In 2009, I would try to answer that question with
our document, The Hydrogen Fuel Cell Vehicle and Station
Deployment Plan. This action plan laid out a series of
actions that needed to get done to really get the market
ready for the commercialization of fuel cell cars. And
one of the key things we identified was a need for
stations.
And in that study -- or in that action plan we
identified a need for about 40 stations really in the key
deployment areas for the automakers would really be one of
the drivers towards a commercial launch.
In 2010 and 2011, we made progress reports that
further defined the station needs. And it was updated
based on the updated annual automaker survey results for
fuel cell cars.
--o0o--
MR. WARD: When we did these development plans,
many things come up that really need to be addressed as we
move forward towards commercialization. And here are some
of the key items:
Those include the finalization of codes and
standards for the retail sales of hydrogen. And that
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includes fuel metering, fuel quality, customer
convenience.
Also to support business models developed by the
private industry, you know, the private sector. The
question is always asked, "How will these early hydrogen
fuel retailers sustain their business and how do they do
that in the case when their station load is relatively low
because the vehicle numbers are just starting to grow? Is
there a mode that makes sense for them?"
And then also we're focused on the outreach and
education of early market communities. Even when we go
into communities and we educate them, we find that the
turnaround in those communities is relatively large and we
end up having to go back in and, you know, educate a bunch
of new people. So it's an ongoing process.
--o0o--
MR. WARD: As was mentioned earlier, the idea of
clustering the vehicle deployments and station deployments
is one of the ways to kind of minimize the number of
stations in order to spark the early market. And we're
really starting to see that now over the past few years,
these clusters to really start to define themselves. In
2010, there was about four public stations that were
accessible. In 2011, we're anticipating the addition of
seven additional stations. In 2012, we're looking forward
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to 11 additional stations through the California Energy
Commission maybe wanting a program.
So we're really excited about the progress that's
been made and really seeing the formation of these cluster
areas as we had talked about many years ago. What's clear
is that we still need more stations. We need to make sure
the cluster development makes sense. We need to make sure
that the customer when they get in their vehicle, they
have some confidence that they can make it to their
destinations and meet their normal driving needs.
--o0o--
MR. WARD: This is the latest automaker fuel cell
vehicle survey. And the green line represents the latest
vehicle numbers. As you can see from these numbers, it's
kind of -- very exciting, at least from my perspective,
that the number of fuel cell vehicles is ramping up at a
faster rate than we had predicted in the previous year.
And I think that goes as a testament to the commitment of
the automakers towards fuel cell technology and also to
the progress that the technology has made.
--o0o--
MR. WARD: The other thing I mentioned before was
business models. So we have to make sure we understand
what are the different cost models that are available or
profit opportunities they offer the retailer.
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This is a study done by the Institute of Applied
Energy in Japan where they looked at fuel costs on the
cost-per-mile basis. This is all Japanese numbers.
That's why they look the way they do.
The key thing is to understand the distribution
of the costs within the fuel cost. And for gasoline, the
majority of the cost, it's a raw material cost, and the
delivery and station-side cost represents a fraction of
the total cost.
For hydrogen it's almost exactly the opposite.
The raw material cost is relatively small. But the
delivering station costs represent the major function of
that total cost.
We think that there is an opportunity to decrease
both the station side and the delivery cost through
optimization of station loading and other different
technologies to drive that cost down.
These are different things that need to be
considered as we look at profit opportunities for the
early retail hydrogen market and also towards the
sustainable hydrogen market. So we look at these both
conventional and nonconventional methods to really make a
business case or to help the private industry define a
business case.
--o0o--
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MR. WARD: And then lastly as we look at the
rollout of hydrogen stations, we're really looking at it
from a more holistic point of view, not just from what the
vehicle needs but also from, you know, what does the
technology need for both the vehicle and the station side,
as well as looking at some of the consumer trends and the
consumer desires for accessibility and reliability and
whatnot. And we're looking to kind of try to balance that
as best as we can.
One of the things that has been available to us
recently is the new tools. And UC Irvine STREET is one of
the great new tools we hope to use to optimize that. And
you'll learn about that shortly. And also to leverage the
specialized working groups and task forces within the
partnership.
--o0o--
MR. WARD: So just to wrap it up real quick. The
partnership is committed to the vehicle station rollout
planning using latest informations and tools. And it's
clear that additional collaborative work is needed to
prepare the fuel cell market for commercialization.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Yes, thank you.
Our next presentation will be from Tim Brown with
UC Irvine.
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(Thereupon an overhead presentation was presented
as follows.)
DR. BROWN: Hi. I'm Dr. Tim Brown with the
Advanced Power and Energy Program at UC Irvine. I'm going
to talk about the great new tool, STREET, in its
application to finding the tipping point for
self-sustaining hydrogen infrastructure with minimum
capital investment.
And as Justin mentioned, STREET is the Spatially
and Temporally Resolved Energy and Environmental tool.
It's a suite of software packages that we've developed
over a number of years.
--o0o--
MR. BROWN: First thing to consider in developing
a new infrastructure for vehicles is that it is a coverage
problem in the early years, not a capacity issue. You
can't simply tally the amount of fuel available and the
number of vehicles and determine if you have enough
stations. You actually have to provide a sufficient
network to alleviate consumer concerns about fuel
availability. And we approached this problem with that in
mind based on a number of factors.
We've looked at automaker market data as to where
they think they have a market for these vehicles.
We have travel-time algorithms, which are the
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mathematical backbone of the analysis.
We look at station land use to understand that
any stations that we predict a site for, they can actually
fit there and they're zoned properly and so forth.
We look at vehicle travel density to ensure that
stations are located near high flow of traffic.
We look at service coverage as a way to quantify
how one scenario matches compared to another.
We also look at fuel cell vehicle deployment
curves to make sure the stations rollout in step with
vehicles.
We consider initial or an existing hydrogen
infrastructure that isn't already in place.
And we looked at some demographic data on where
our vehicles are residing and where they are sold.
--o0o--
MR. BROWN: So to define the regions of interest,
we overlay the areas where automakers think they can sell
their cars with residential land use to determine a bit
more refined focus. And if we zoom in, we can see these
three red areas I've outlined - basically Santa Monica and
west L.A., Torrance and coastal cities, and coastal and
southern Orange County.
--o0o--
MR. BROWN: To get a feeling of how large these
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areas actually are - it's hard to see from a map - there's
over 3.1 million people live in these areas, over 600
gasoline stations, roughly two million registered cars,
and over 200,000 new car sales in these areas alone each
year.
--o0o--
MR. BROWN: So if we examine this in more detail,
we can look at how the gasoline station infrastructure in
these areas plays out today. There's 636 gasoline
stations currently in these areas. And this can provide a
travel time from anywhere in one of these regions to a gas
station in four minutes. And, thus, shown on this plot
here where you have average travel time -- or actually
maximum travel time on the vertical access and number of
fueling stations on the bottom. And you can see at four
minutes 636 gasoline stations this little red dot.
If we look forward and say how many hydrogen
stations are there existing or funded, there are 14.
Those are represented by the red stars on the map. And
not surprisingly, those 14 hydrogen stations don't supply
as good a network as the gasoline. They actually produce
a maximum travel time of 18 minutes, which is not good
enough for the customers.
We think the right tipping point for customer
adoption where they feel comfortable with the technology,
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but obviously we can't reproduce the four minutes, we
think it's around six minutes travel time.
If you look at the graph and you sort of draw a
mental line between the hydrogen stations and the gasoline
stations, you say six minutes. That gives the impression
maybe 5 or 600 hydrogen stations were needed. But that's
not the case at all. It's actually much less than that.
So If I expand my plot and I move the hydrogen
station -- the gasoline station's way off to the right.
They're not even in the picture anymore. And we had one
more hydrogen station, this one down in Orange County, we
can reduce that travel time from 18 minutes down to 15
minutes. And we add one more station and reduce that
travel time from 15 minutes down to 12 minutes. You see
there's a very big bang for your buck here in the early
years. And subsequent stations have a similar effect.
So adding seven more stations throughout the area
can reduce travel time to 8 minutes, additional 3 to 7
minutes. And then four more to get down to the 6 minutes.
So in the end 32 stations can reduce travel time
to just six minutes in these three regions.
We can't have just 32 stations. We need a few
what we call connector and destination stations.
Connector stations would provide the bridge between
regions, destination of ride access to areas like Las
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Vegas or Sacramento.
So in all it's going to be around 38 to 49
stations to serve the need of all southern Californians,
particularly in these areas, for the coverage. If you
limit the infrastructure to those quantities, roughly 40
stations, and you apply the numbers that Justin just
presented on vehicle deployment, there's roughly 34,000
vehicles predicted by the automakers to go down the road
in southern California in 2017. 34,000 divided by 38,
including the amount of fuel used per vehicle, comes out
to a throughput of around 500 kilograms a day per station
already in the year 2017 just, you know, two or three
years after commercialization, which is well within the
range, which I think we'll hear from energy suppliers, of
where they can have -- you know, they're in the black.
--o0o--
MR. BROWN: So in the end, benefits of careful
planning:
Reduce capital investment to just 6 or 7 percent
of existing gasoline stations in the region.
Increase network effectiveness. You know, come
down to a travel time of six minutes, which we feel is the
tipping point.
And promote high throughput in relatively early
years.
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--o0o--
MR. BROWN: And I want to acknowledge All of the
input and partners we've had in this work, including
automakers and energy companies.
CHAIRPERSON NICHOLS: Thank you.
MR. BROWN: Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you, Tim.
Our next presentation is from Steve Eckhardt with
Linde, North America.
(Thereupon an overhead presentation was presented
as follows.)
MR. ECKHARDT: I thank you. I'm Steve Eckhardt.
I'm head of business development and alternative energy
for Linde. And on behalf of Linde, I appreciate the
invitation to come here and speak today about hydrogen
infrastructure.
--o0o--
MR. ECKHARDT: What I'd like to do is first give
an overview of Linde and hydrogen fuel. And we have over
70 fueling stations we've designed, built, and installed
around the world. That's provided over 200,000 safe
hydrogen fuelings in a number of different segments,
namely, automotive, bus, and material handling.
We also produce -- build and produce hydrogen,
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both gaseous and liquid hydrogen from central processing
plants that's delivered to customers; and also produce
gaseous hydrogen with on-site technology such as steam
methane reformers and electrolysis.
--o0o--
MR. ECKHARDT: I just want to point out a few
projects here that I think are relevant for the discussion
today. AC Transit - and Jaimie talked about this a little
bit - I think a point on this one, a key goal of this
project is to show that hydrogen fueling of fuel cell
buses can be done as practically and as quickly and as
easily as it can be with diesel buses. It's critical that
we show that the limited amount of space in a transit
property that we can get this done. And ultimately that's
what transit authorities are going to look very hard at as
this go out and deploy more fuel cell buses.
In Berlin we have partnered with Shell and
recently commissioned a station, a very high throughput
hydrogen station. A major point about this one is that we
have put in the storage and the compression equipment
underground. And it's a critical step that we all need to
take to ensure that the space, the very limited amount of
space that's available on gasoline station forecourts can
be used the way gas stations would like to use it, which
is oftentimes convenience stores or car washes, where they
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make very good money, and are going to be hesitant to
allow us to take up significant space with hydrogen
equipment.
Another point on the slide I'd just like to make
is that we have received funding from the Energy
Commission for three automotive fueling stations. And one
of those stations is also being funded by the ARB, and are
appreciative of that funding, allowing us to build three
more automotive stations here in California over the next
year to a year and a half.
--o0o--
MR. ECKHARDT: This slide -- these numbers we've
all seen several times from the partnership and the OEMs
with respect to car deployment. When we look at -- at
Linde when we look at this slide and we look at these
numbers, what we say is, can we be ready to fuel these
cars? We're talking a major change, a major rollout,
orders of magnitude increase and the number of cars that
will be out there. And we ask ourselves, can we fuel
these cars? And The answer is, yes, we believe we have
the technology and the capabilities to do that. And What
I'd like to do is talk about a scenario about how we can
actually make that happen.
--o0o--
MR. ECKHARDT: So if we look at on this slide the
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demand, taking from fuel cell cars, ultimately translating
that to hydrogen demand, you see some major increases. I
mean right now we have maybe a hundred to 200 kilograms a
day at most being dispensed in hydrogen fueling stations,
and we need to increase that to over 50,000 kilograms a
day in just a few short years.
That order of magnitude increase in hydrogen
demands means an order of magnitude increase in the
fueling station capability. And that's going to be a big
test, to make sure that we can meet that need. And so,
you know, the question is, how do we ultimately do that?
So what I'd like to do is translate that hydrogen demand
of 53,000 kilograms a day into stations.
--o0o--
MR. ECKHARDT: So if we look at the stations that
are in place today, there are a number of hundred-kilogram
and below stations that are operating today.
There are additional stations that will be
deployed in the next year to year and a half that are
anywhere from 150 to 250 kilograms a day. So I've labeled
those as a medium station, on an average of 200 kilograms
a day.
And then we believe we need to start deploying
large and very large throughput stations that can fuel
significantly more cars and significantly higher volumes
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of hydrogen.
--o0o--
MR. ECKHARDT: On this slide here, you can see
how things ramp up. We start in 2012, at the end of 2012
when we'll have approximately 20 stations that will be
fueling vehicles and meeting the needs of the cars that
are out there in 2012. In the ensuing years we'll see the
number of stations increasing. The medium size station,
we need significantly more of those size stations. But
then we believe we also need to introduce the large and
the very large throughput stations. We need to introduce
the very large and large throughput stations to meet the
needs of those 13,250 cars all the way up to 53,000 cars
in the middle of the decade on into 2017.
So while these large and very large throughput
stations are a relatively small share of the total number
of stations, in almost any scenario you can envision they
will have to fuel a disproportionate number of cars.
There will be a disproportionate number of fuelings on
those large throughput station. So for that reason alone,
the heavy reliance on those stations means we need to move
relatively quickly to prove those stations.
And I just want to talk about two other reasons
why I think we need to do that.
--o0o--
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MR. ECKHARDT: First is practicality. Like with
diesel buses, we can fuel diesel buses, we can show how we
fuel gasoline cars, hundreds, even thousands a day at a
single site. But we need to show that that can be done at
a hydrogen fueling station, and we need to show that we
can do it while we meet our customers' expectations of
three-minute fueling and not having to wait in line.
--o0o--
MR. ECKHARDT: The second reason we need to do it
is we need to prove the economics. We need to prove that
a business model is viable in this industry for hydrogen
fueling. And that's one question that always is plaguing
us and that's one question we're always asked, is "Well,
what's the business model? Can you make it profitable?"
And what we need to do that is we need to show low life
cycle costs. And that's something that we can do with
these types of stations that are going to be dispensing
higher volumes of hydrogen.
The investors are going to look at this, the
government will look at this, and industry is going to
look at this. And we need to show how it's
self-explaining.
And, finally, in terms of how we do that: Linde
has developed two very high throughput station technology
concepts. These technologies are being deployed this year
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in commercial settings in Germany, and we will be ready to
deploy those in California in the next few years.
Thanks for your time.
CHAIRPERSON NICHOLS: Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you, Steve.
Our next presentation is from Ed Kiczek with Air
Products and Chemicals.
MR. KICZEK: My name is Ed Kiczek. I'm the
Global Director of our Hydrogen Energy Systems business.
And thank you for the opportunity to address the Board.
--o0o--
MR. KICZEK: For those of you who are not
familiar with Air Products, we are the world's largest
supplier of merchant hydrogen. We have three major
production facilities in California, one right here in
Sacramento. And we produce about a third of our total
capacity right here in the State of California.
We've been active in hydrogen fueling since 1993.
We've built over 130 stations in 19 countries. And
currently we're fueling at a pace of over 350,000 fuelings
per year. And we're nearing three-quarters of a million
total safe fills.
Air Products has been recognized by the industry
as the world's safest chemical company, and we've held
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that distinction for several years. And to us, nothing is
more important than safety.
--o0o--
MR. KICZEK: We are participating in a number of
several -- and several profitable commercial hydrogen
fueling markets today, including forklifts, unmanned
aerial vehicles, cell towers, submarines, unmanned
underwater vehicles, stationary power, both high
temperature and low temperature fuel cells. We use these
markets actually to help us to develop many of the
products leading to light-duty vehicles, because the
volume was in these adjunct markets where we can develop
those products.
We also recognize the need for renewable hydrogen
and are currently producing renewable hydrogen at our
California facilities by the purchase of renewable natural
gas and a wastewater treatment facility at Orange County
Sanitation District via processing the digester offgas.
This is the Fountain Valley project that many people have
mentioned.
And so I guess you can say technically everybody
here in this room really is actually a hydrogen generator
in the endgame.
Some of these experiences we've actually come to
realize that current supply systems employed within the
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industrial gas system are really not conducive to the
transition of a fueling market, a retail fueling market,
and therefore we've sought to develop fit-for-purpose
supply platforms in order to meet this need. And we've
been working on this for several years.
--o0o--
MR. KICZEK: Within the last year, we've
introduced at Air Products two new supplying modes which
will drastically reduce the cost of hydrogen dispensed at
the retail sites and will fill this transition -- this
very much needed transition gap.
These technology platforms include composite
hydrogen trailers and dual-phase liquid hydrogen trailers.
Both of these technologies deliver high pressure gas to
the station versus generating it on-site. And these
technologies are on the road today in both the U.S. And
Europe, and they're operating here in California and
actually in Sacramento. And so I welcome anyone from the
Board to tour our plant in Sacramento and actually see
these technologies. And a portion of these technology are
actually operating at AC Transit today.
We believe that these technologies will provide a
dispensed hydrogen price which is competitive with
gasoline today.
--o0o--
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MR. KICZEK: With these proprietary technologies
we believe Air Products is in a rather unique position and
able to offer an expandable fueling platform from small to
large systems. These new supply modes allow us to make
the business case at the smallest possible capacities and
grow these systems with the increasing demand with just
additions and some modifications on each of the sites.
The total capital required at the fueling site
has been significantly reduced, resulting in lower initial
transition investment due to the reduction of
under-utilized assets. We can place a station on an
existing forecourt for less than a million dollars.
Our strategy has been build what you need and
let's expand it as the demand comes forward.
--o0o--
MR. KICZEK: We're actually deploying these
systems today under awards from CARB and the California
Energy Comission in southern California, and we certainly
appreciate those awards.
The first of the nine stations is actually
currently in construction in Harbor City, California -
it's pictured at the bottom right - and due to be
completed in mid-July. These stations will be placed on
any existing -- can be placed on any existing gasoline
forecourt. They're modular. They're expandable, require
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only 800 square feet of plot space. And we can expand
these from the small size that they're starting at at 100
kilograms to up over a thousand kilograms a day, which
more than meets the need that Dr. Brown had mentioned.
Placement of these stations has been made in
conjunction with discussion with all of the OEMs, where we
provided the opportunity for them to choose from over 60
sites. And they actually selected the most ideal sites
where they wanted to see fueling.
As the demand grows at each site, we can manage
the customer through the demand cycle.
Just 30 seconds more.
--o0o--
MR. KICZEK: This project alone has an immediate
impact of creating 240 jobs in the State of California,
because all of our products are sourced in the State of
California.
--o0o--
MR. KICZEK: But the last slide here, and I'll
cut it short, is we do have one challenge. And that one
challenge is the lack of volume or loading of those
stations in the early years, as the infrastructure needs
to lead vehicles to obtain coverage. We've heard about
the UCI STREET model. We believe that you need 30
stations. Once you get 30 stations, we believe that that
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will seed an area and then commercial forces will take
over. And with the sustained business case, you can see
significant investment that will come from industry, in
excess of hundreds of thousands of dollars.
--o0o--
MR. KICZEK: Finally, in summary, we've
reconfigured the supply chain on a fit-for-purpose basis.
We believe that the infrastructure capital cost -- we've
lowered them, we've cut them almost in half, and that the
hydrogen fueling will be affordable to gasoline and
gasoline models today.
We believe that California has an opportunity
here to be a model for the rest of the world. I'd like to
see California take the lead. But I'll also note that
there are two foreign countries which have embraced our
concepts are moving forward, and we're looking to get them
approved in those counties.
Thank you very much.
CHAIRPERSON NICHOLS: Thank you.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Thank you.
Our last presentation will be from Dr. Scott
Samuelsen from the National Fuel Cell Research Center at
UC Irvine.
CHAIRPERSON NICHOLS: Welcome.
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MR. KICZEK:
(Thereupon an overhead presentation was presented
as follows.)
MR. SAMUELSEN: Chair Nichols and Board members.
I'm Scott Samuelsen, the Director of the National Fuel
Cell Research Center. I've been asked to speak about the
so called Fountain Valley or Orange County Sanitation
District energy station. It's really the epitome of an
interaction between the Partnership and the California
Stationary Fuel Cell Collaborative, at the nexus of
electricity and hydrogen.
--o0o--
MR. SAMUELSEN: Looking to the interests of the
partnership, it's on the automobile where we've seen
examples of the manufacturers' production that's expected
to be commercially launched in 2015. Hydrogen is the fuel
and we're talking on this panel with respect to
infrastructure.
--o0o--
MR. SAMUELSEN: This presentation is really to
look at the role of a stationary fuel cell in supplying
that hydrogen. So I want to take a moment and just look
at the application of the stationary fuel cell, where on
the left the hydrogen is provided through a fuel
processor, for example, a natural gas being the fuel; and
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on the right the direct current is transformed to
alternating current. And up there at the exhaust we try
to capture as much of the heat energy as possible and
utilize it to improve the overall efficiency of the
operation.
We've seen from Katrina Fritz-Intwala examples
today of stationary fuel cell applications and from Mike
Upp the ClearEdge applications.
--o0o--
MR. SAMUELSEN: What I want to focus on here is
that hydrogen there just on the left of the fuel cell
stack and recognize the role of the fuel processor in
providing that hydrogen. In the kind of advanced fuel
cells, which we call the high temperature fuel cells -
those are the solid oxide or molten carbonate - the
reformation is promoted by a high efficiency due to the
availability of water and heat that's already at the anode
of the stack.
--o0o--
MR. SAMUELSEN: Well, let's bring back now the
mobile fuel cell. And you see at the top the availability
or source of hydrogen and then at the bottom kind of the
requirement for hydrogen. So it vets the question of --
or begs the question of just combining the two as to
whether the stationary fuel cell can provide the hydrogen
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demand for the fueling public.
Let's look at how that might look. This is a
hydrogen station that's supplied today by a liquid
hydrogen truck. If instead the hydrogen came from a
stationary fuel cell - there it is operated on natural
gas, there it is - that fuel cell could provide
electricity and heat to a local customer, say, a
condominium, and then hydrogen on demand to provide the
hydrogen supply for the fueling center. We call this -
you see it up at the top - a high temperature fuel cell
with hydrogen tri-generation, or in the rubric of the
hydrogen highway report, an energy station with these
three products that come from it.
--o0o--
MR. SAMUELSEN: I want to transform this into a
schematic just to show a particular principle here, which
is, in a word, a synergism that is created by providing a
higher concentration of hydrogen at the anode. It
actually increases the efficiency of the fuel cell. It
allows us to create the reformation at a very small amount
of energy.
To demonstrate that, let's just bring in a
hundred megajoules of natural gas into the fuel cell.
That's going to create 47 megajoules of electricity and 53
megajoules of high quality heat. That's kind of the
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conventional way that we operate a stationary fuel cell
today, in this case a molten carbonate fuel cell.
Going into the tri-generation mode, let's provide
another 43 megajoules of natural gas, a total of 143.
That's going to allow us to generate 43 megajoules of
hydrogen. And there you see the high efficiency due to
this synergistic effect. Still maintaining 47 megajoules
of electricity and not quite the same level of 53
megajoules, but rather 49 megajoules of high quality heat.
--o0o--
MR. SAMUELSEN: So we go back to the energy
station. This today is the most energy efficient and
environmentally responsible manner by which to produce
hydrogen 24/7, in this case from natural gas.
But we have another opportunity, which is to
power the fuel cell, not in natural gas, but on a
renewable gas, let's say a digester gas or landfill gas.
And then up in the top this becomes a high
temperature fuel cell with renewable hydrogen
tri-generation, or in other words a renewable energy
station.
--o0o--
MR. SAMUELSEN: An example of this, which is the
last slide, is a wastewater treatment plant. The sledge
over at the left is what we know it is. And the digester
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to the right is where it's processed to create a more
amenable product for disposable.
That digester needs heat, and that's provided
today by a boiler with its associated criteria pollutant
emissions. If instead we replace that boiler with a fuel
cell, we can then use the heat that would otherwise be
vented to provide the heat for the digester for free. No
emission of criteria pollutants. In addition, we have
electric power coming from that fuel cell.
--o0o--
MR. SAMUELSEN: Katrina showed us earlier the
City of Tulare Wastewater Treatment Plant, 900 kilowatts.
There's about 9 megawatts throughout California of this
product already commercially deployed.
--o0o--
MR. SAMUELSEN: But here we're going beyond that.
We're taking not only AC power, but remember
tri-generation. So here comes the hydrogen, now
biohydrogen. And this is actually a concept that's being
provided, and we've heard about it today, for
demonstration at the Orange County Sanitation District,
indeed in Fountain Valley at the Euclid exit of the 405.
Support is from the U.S. Department of Energy, the Air
Resources Board, and the Air Quality Management District.
The opening is planned for August - to be
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specific, August 16th - where the public can drive up and
be able to refuel on biohydrogen. This particular plant
is providing 300 kilowatts of electricity and about 125
kilograms of hydrogen.
Thank you.
CHAIRPERSON NICHOLS: Thank you very much. This
is an exciting prospect.
So it means you drive to your local sewage
treatment plant to get your car gassed up, is that
basically the deal? Nothing wrong with that, I guess, if
we've got the site.
It seems like it's almost -- in some ways almost
too good to be true. But I can't think of any reason why
it shouldn't be.
Curious about -- to ask you a completely
different question, if you don't mind. But it's something
that's sort of been on my mind lately, as we think about
the kind of dramatic reductions that we're going to need
in emissions to reach air quality standards that are
likely coming in the future. And, you know, we
collaborated with the South Coast Air Quality Management
District on a document that basically indicates that, not
next year, but sometime in foreseeable decades at least,
that it's almost impossible to envision combustion as an
activity that's going to be allowed really in -- at least
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in urban areas like Los Angeles. And the concern is that
there's so much that goes on at the individual homeowner
level in terms of use of natural gas for -- in most cases
at least for, you know, running your stove and your hot
water heater or heating your house and so forth, and
wondering if localized -- if small fuel cells at the level
of what a home would use are a foreseeable likely
application.
Is that a sensible way to go? Is it a way that,
you know, you all are thinking about fuel cells evolving?
Or is this more something that's going to be limited to
larger scale buildings as we look ahead?
MR. SAMUELSEN: Well, fuel cells are being
deployed commercially today, Chair Nichols, in homes.
ClearEdge, Mike Upp, who spoke earlier, that's a
product -- their five kilowatt product, a proton exchange
membrane fuel cell that also has waste heat recovery.
It's in the very early stages in the United States, with
the first market, as Mike pointed out, being in
California.
In Japan it's a more popular deployment that's
occurring right now. Not only proton exchange membrane
fuel cells but also five kilowatt solid oxide fuel cells.
I expect within 20 years they'll be as popular as we have
personal computers in homes today.
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We're also seeing larger fuel cells being
deployed for residential deployments. Katrina referred to
that mixed use as an example where large fuel cell systems
can serve a variety of customers, from apartment owners to
the commercial operations within a mixed use sector.
So it's at the beginning stage with respect to
residential. But we're already now about 20 years into
commercial deployment of fuel cells at the stationary
level.
CHAIRPERSON NICHOLS: Great. Thanks.
Maybe just one other comment. I guess it's sort
of obvious that this panel does not include any of the
people whose names are normally thought of as being
emblazoned across gas stations, current fueling stations.
Although there were a couple of examples I guess of
co-location there.
And this is I guess really more -- maybe this is
part of Analisa's wrap-up. I'm not sure. But I think it
would be good to sort of update the Board on what has been
the reaction of the oil industry, the petroleum industry
to this emerging market to date, and any comments that you
would make about why we don't see any big names here.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Sure. The oil companies have been an active
partner in the fuel cell partnership, infrastructure being
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a primary effort that the partnership has been undertaking
in the last few years. But in our discussions, they've
been looking for -- and they've been involved in some of
the early stations that have gone in - the Shell Santa
Monica station is an excellent example of that - and have
had some involvement with some of the very early stations
which we funded.
But primarily, the folks which are getting the
work done and at this stage are very actively bidding on
the funds that we have available by the state are the
folks you see sitting at the table. More of the
conversation from the oil companies has been centered
around being able to see the business case.
And also a very fundamental shift has taken place
in California in terms of who owns gasoline stations. The
oil companies have divested themselves primarily from
retail stations. And so while we see stations branded by
the oil companies, those are independently operated and
owned concerns -- business concerns that don't have the
control of the oil company over them.
So this starts to feed into one of the changes
that we're looking at making with the proposed amendments
to the Clean Fuels Outlook that we'll bring to you in the
fall, changing who we would regulate rather than the
assumption that if we regulate the retail business, we
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would capture the largest providers of fuel. That
wouldn't be the case anymore. And so we're looking at
moving that upstream to the oil providers -- or fuel
providers.
So they remain active participants in the fuel
cell partnership and certainly consult on creating the
business case and the path forward.
But these are the folks that are doing the work
on the ground today.
CHAIRPERSON NICHOLS: Thank you.
And I guess maybe this is really for Mr.
Fletcher. But do you see any likelihood that the low
carbon fuel standard will lead to some of the companies
that are subject to that moving in this direction?
DEPUTY EXECUTIVE OFFICER FLETCHER: I don't think
in the early years of the program it will. We did look at
ways to provide incentives for, you know, credits, extra
credits, for example, in the early years. And it just
didn't seem like it was the best approach, which is why I
think they were looking at the clean fuels outlet. So I
think the amount and volume of hydrogen that would be
available during the domain of the early years of the low
carbon fuel standard are so small that it's not likely to
provide that much of an incentive.
As you go -- you know, if we look beyond 2020, I
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think it can play a huge role.
CHAIRPERSON NICHOLS: Okay. Thank you.
I don't see anybody leaping forward with
questions. But we also know that we have a treat in store
for us in the next few minutes. So maybe I'll let you
wrap up, I guess.
Analisa, did you have some final comments, and
James? And then we'll go take our tour.
EXECUTIVE OFFICER GOLDSTENE: And we have one
speaker who signed up.
CHAIRPERSON NICHOLS: Oh, we do have one public
speaker.
All right. Well, let's finish the staff
presentation.
SUSTAINABLE TRANSPORTATION TECHNOLOGY BRANCH
CHIEF BEVAN: Okay. Well, I think our panel presentations
today have shown that there's real progress in
performance, durability, and cost, demonstrated with
real-world installation and placements of fuel cells, both
stationary and mobile and the use of hydrogen.
We heard a key message that work is needed on
fuel for fuel cells and that there's a distinct
appreciation for the recognition the role fuel cells play
in our climate change policies and regulations, and a need
to provide a consistent government policy and support.
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Clearly we heard that infrastructure is critical,
especially for the deployment of fuel cell vehicles.
I don't know how clear it came out in the
presentations, but in talking with the manufacturers in
preparation for this and also in prior meetings, they have
cars sitting on lots waiting for infrastructure, ready to
find the customers to make use of the cars.
We have an exciting future ahead of us. Fuel
cells are no longer described as being ten years ago.
If I can use a personal interjection. When I
first started working on hydrogen and fuel cells, I used
to peg the commercialization as being right around the
time my son would be ready to take his driving test. The
way things are looking now, I get to drive the car for a
few years before he's ready to take his test. He's seven
now.
So I think this is tremendous progress. I like
that there's been this measuring stick. And I was afraid
that it would go the other direction. And so I'm very
optimistic and enthusiastic. And I think that our
panelists here today have helped us gain a view of where
things are going and can help us all take that vision
forward.
CHAIRPERSON NICHOLS: Well, it's been a terrific
set of presentations. And I know how challenging it is to
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try to condense things in short order. But it really is
helpful to us to have this diversity of sources that we've
been able to hear from.
So thank you all for making the effort to be with
us and to help educate us as well about the opportunity.
I think that the fuel cell partnership has been
a -- well, both fuel cell efforts have been remarkable in
the amount of private sector involvement that they have
generated as well as in the opportunities for government
to really find ways to work on some of these issues that
would have been quite difficult if we'd stayed in our own
silos. Not to mention also the benefit of having the
academic connections both with Irvine and Davis.
So this has been quite a model I think that we've
also managed to create here in California in an
institutional sense. And I'd like to acknowledge that as
well, especially appreciation to Dr. Samuelsen for being
with us today. Thank you.
And we do have one member of the public who asked
to address that Board. And that is Fernando Corall from
Plug Power.
MR. CORALL: Thank you. Good afternoon. I will
make it brief.
My name's Fernando Corall. I'm with Plug Power.
I'm Director of Sales for the Western Region of Plug
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Power. And I just wanted to add my comments to several of
the gentlemen and presenters. We work with their
products, with Linde, with the UC Irvine. And I just
wanted to give you some perspective as to the material
handling side of the fuel cell industry.
Currently, there's over 1200 units being powered
by hydrogen fuel cells in the United States. That
represents -- we talked about throughput. That represents
approximately 2,000 kilograms per day of hydrogen being
consumed by forklift trucks.
Further, it's about 5,000 fuelings per week that
are occurring primarily in the United States. I say that
because, unfortunately, none of those numbers apply to
California. In California, there is no -- there are no
material handling equipment being fueled by hydrogen. And
one of the reasons is primarily the cost of
infrastructure. We talked about the infrastructure for
the automotive industry. The infrastructure for
hydrogen -- for material handling is an expensive
proposition.
Commercialization of the units are almost on a --
is here. It's a capital cost. It's a wash when it comes
to purchasing a hydrogen fuel cell for a lifttruck versus
the batteries -- the lead acid batteries and the chargers
required. The stumbling block is essentially the
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infrastructure.
And that's one of the reasons why I'm here is to
encourage the Board to revisit their decision to withhold
funding for off-road commercial -- or off-road hydrogen
fuel cells. I know that you are funding the stations for
the automotive industry and for buses and so on. But I
would also like to encourage you to look at hopefully
funding in 2011, 2012 some stations that would be
dedicated to hydrogen fuel cells powering forklifts.
CHAIRPERSON NICHOLS: Okay. Thank you.
MR. CORALL: Thank you very much.
CHAIRPERSON NICHOLS: All right. Mr. Goldstene.
EXECUTIVE OFFICER GOLDSTENE: Thank you.
Analisa I think did a great job. She and her
team were fantastic. And thanks to all the panelists.
I think now -- we have until 1:00. We have real
life examples out in the front on the street and on the
patio of stationary and mobile fuel cells that we'd like
the Board to go out and take a look at now.
CHAIRPERSON NICHOLS: I think we should combine
it with our lunch break, if we can.
EXECUTIVE OFFICER GOLDSTENE: And we'd combine it
with our lunch after.
CHAIRPERSON NICHOLS: Because we do have a couple
of measures we have to take up this afternoon as well.
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EXECUTIVE OFFICER GOLDSTENE: Right. We have a
short item on the air quality matter and then the
oceangoing vessel, which will take about an hour plus.
CHAIRPERSON NICHOLS: Right, which is an public
hearing item.
So do you think we can do this all in an hour?
We don't have an executive session scheduled today at
lunchtime.
EXECUTIVE OFFICER GOLDSTENE: Right. No, I think
we could be back maybe by 1:15 or so.
CHAIRPERSON NICHOLS: All right. Let's try for
1:15 then to return.
Thanks very much, everybody.
12:04 PM
(Whereupon a lunch recess was taken.)
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AFTERNOON SESSION
1:29 PM
CHAIRPERSON NICHOLS: Ladies and gentlemen, as
usual, we were a little optimistic about how long it would
take us to get through the tour and lunch, but we're
starting a few minutes late here.
And I think we're going to start with an
informational item. At least I hope that's where we are
-yes? - on the staff's recommendations for designations
under the revised sulfur dioxide federal standard.
So, Mr. Goldstene, would you please introduce
this item.
EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman
Nichols.
U.S. EPA's in the process of reviewing the
adequacy of all federal air quality standards. In June of
last year, they revised the sulfur dioxide standard.
As a first step in implementing the new
standards, states are required to submit recommendations
for area designations to the EPA. Staff will provide a
brief summary of the designation recommendations that were
recently submitted to the EPA.
Gail Sweigert from Planning and Technical Support
Division will provide the presentation.
Gail.
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AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
Thank you, Mr. Goldstene, and good afternoon Madam
Chairwoman members of the Board.
(Thereupon an overhead presentation was presented
as follows.)
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
As Mr. Goldstene mentioned, I'll be summarizing our
recommended area designations for the new federal sulfur
dioxide standard.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
In June of last year, U.S. EPA adopted a new one-hour
sulfur dioxide, or SO2 , standard. This standard is more
stringent than the previous SO2 standards, which had not
been violated in California more than three decades.
Under the Clean Air Act, state recommendations on
area designations are due one year after the standard is
adopted. Consistent with this time line, we submitted our
recommendations earlier this month. EPA now has a year to
consider our recommendations before issuing final
designations and boundaries. We expect EPA's final action
by June of next year.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
The new federal SO2 standard is set at a level of 75 parts
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per billion averaged over a one-hour time period. This
standard replaces the previous 24-hour and annual
standards, which had been in place for many years.
The new one-hour standard focuses on acute,
short-term health impacts. EPA changed the averaging time
because health studies showed that short-term exposures,
on the order of five minutes to one hour, were strongly
linked to adverse health impacts. Under the previous
24-hour and annual standards, short-term concentrations
could exceed the level needed to protect public health.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
The newer health evidence for sulfur dioxide shows a
stronger link between short-term exposure and adverse
respiratory effects. These respiratory effects include
difficulty breathing and a worsening of asthma symptoms,
especially in exercising individuals.
Additional health evidence also points to an
increase in emergency room visits and an increase in
hospital admissions for all respiratory illnesses,
including asthma, when SO2 concentrations are elevated.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
The area designation process for SO2 is similar to that of
other pollutants. The review is based on air quality data
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for a recent three-year period; in this case, 2007 through
2009. Based on these data, staff determined the
designation status - in other words, does air quality meet
the standard or does it violate the standard? Staff then
proposed an appropriate boundary, using the criteria
specified by EPA guidance. For SO2 this included five
factors: Emissions, air quality, meteorology, geography,
and jurisdictional control.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
Compared with other parts of the nation, the total amount
of SO2 emissions in California is relatively small.
However, SO2 emissions contribute to PM2.5 pollution, so
ongoing emission reductions remain important.
Most SO2 emissions in California are associated
with a few source categories. In particular, oceangoing
vessels account for the largest portion of the statewide
total, about 55 percent of California's SO2 inventory.
A remaining large portion of the statewide SO2
emissions comes from stationary sources. The majority of
these emission come from petroleum refining, fuel
combustion from sources such as boilers and process
heaters, and from mining processes and cement
manufacturing activities. These type of stationary
sources are widely distributed throughout California.
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However, the largest sources that are of most concern for
SO2 are limited to just a few areas of the state.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
Decades ago California switched from fuel oil to natural
gas for generating electricity, which dramatically reduced
SO2 emissions in California. SO2 emissions throughout the
state are now close to half of what they were in 1990.
Much of the ongoing reduction is due to improved controls
on stationary sources and limits on the sulfur content of
fuels they use.
Another large reduction is attributable to
limiting the sulfur content in shipping fuels, which has
especially benefited the areas with large port operations.
The next item on today's agenda deals with ARB's
oceangoing vessel clean fuel regulation, which has already
reduced emissions nearly 80 percent. This rule is a key
PM2.5 SIP measure and it also helps to improve SO2 air
quality along California's coast and in port communities.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
The reduction in SO2 emissions is mirrored in the ambient
SO2 air quality. This graph shows the long-term trend for
the three most populated areas of California: The
San Francisco Bay Area, the South Coast, and the San
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Joaquin Valley. In all three of these areas,
concentrations are now at least half of what they were
20 years ago. In addition, they are well below the level
of the new one-hour federal SO2 standard.
While there is a gap in the trend analysis for
the San Joaquin Valley due to incomplete data, the recent
values show low levels compared to the new federal
standard. Similar trends hold true for other parts of the
state.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
Currently, California has ambient SO2 monitoring networks
with a total of 39 sites. These sites are located
throughout the state, with the most populated areas having
the largest number of monitors. Concentrations at all
sites are far below the level of the new
75-part-per-billion standard, with maximum concentrations
in urban areas ranging from 20 to 35 parts per billion.
Concentrations in nonurban areas that are not
located near large stationary sources are much lower,
ranging from 2 to 17 parts per billion.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
In addition to the statewide network, there are several
special purpose monitoring networks in areas with
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significant SO2 sources. One of these areas is the Long
Beach / Los Angeles port complex. As part of their clean
air action plan, the ports established a six-site
monitoring network to measure port-related pollution
concentrations.
This special network has been operating for about
five years, and recent data show one-hour SO2
concentrations in the range of 34 to 62 parts per billion.
Although these levels are generally higher than those
measured by the ambient monitoring network, they are still
below the level of the new federal standard.
We anticipate that this network will continue to
operate long term, providing useful information about SO2
and other pollutant levels in the ports area and
surrounding impacted communities.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
In addition to the ports monitoring in the South Coast,
the Bay Area also conducts special purpose SO2 monitoring.
A network of 15 ground-level monitors are located near or
outside the property boundaries of the five Bay Area
refineries in Contra Costa and Solano counties. These
refinery operations are among the largest SO2 sources in
the state.
Under the District's Regulation 9, the monitors
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measured downwind near-source concentrations as part of
the facility operating permit.
Measured concentrations at these monitoring sites
range from 1 to 56 parts per billion, all of which are
below the level of the new federal SO2 standard. As with
the port's monitors, we expect this facility-related
monitoring will continue operating long term.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
In addition to evaluating air quality data, the federal
SO2 standard designation process contains a new
requirement that air quality be supplemented with modeling
for large stationary sources.
U.S. EPA guidance focuses on sources that emit
more than 100 tons of SO2 per year.
In California, 34 facilities exceed this emission
threshold and will require modeling.
While the majority of these facilities are
refinery operations, the remaining large sources include
cement plants, mining operations, glass manufacturers, and
co-generation facilities. SO2 emissions from facilities
in California are small compared to large SO2 sources
elsewhere in the nation.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
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Over the next several months, our air quality modeling
staff will be working with the local districts to develop
an SO2 modeling protocol. The larger districts will
complete their own modeling efforts, and ARB staff will
conduct modeling for the smaller districts.
We have committed to providing the modeling
results to EPA prior to their making final area
designations in June 2012.
--o0o--
AIR QUALITY ANALYSIS SECTION MANAGER SWEIGERT:
In summary, all SO2 monitors in California show compliance
with the new federal standard. This includes monitors in
the ambient network as well as special purpose monitors.
In most cases, concentrations comparable with the federal
standard are well below the level of the standard.
As I mentioned earlier, staff has submitted a
technical analysis to U.S. EPA in support of the
attainment recommendation. Modeling for large stationary
SO2 sources will be completed as required and submitted to
U.S. EPA before the area designations are made.
This concludes my presentation. And now I'll be
happy to answer any questions you have.
CHAIRPERSON NICHOLS: This really isn't a
question, but it's a comment for the Board members.
I think the staff was perhaps a little too plain
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vanilla in the presentation to highlight this point. But
as a result of having to do the additional monitoring and
modeling for the SO2 standard, which as you can see is in
and of itself not a problem for us in terms of planning,
we are going to be getting data out of this new
monitoring, which I think is very helpful and responsive
to concerns that have been raised by communities that are
downwind of these major facilities. And so I'm hoping
that, if anybody is listening today, or if they're not,
that in the future we will be able to communicate that
this is an area where perhaps an investment that's
required by one part of the Clean Air Act turns out to be
moving us in a direction that's very useful and really
enabling us to respond effectively to concerns that are
being raised by all of the groups that are particularly
concerned about environmental justice considerations. And
I think it's going to be useful to researchers and others
as well.
BOARD MEMBER BALMES: So does that mean that
we're monitoring for other pollutants in conjunction with
SO2 ?
CHAIRPERSON NICHOLS: These stations have other
monitoring attached to them in many instances.
Yes. Go ahead, Karen.
AIR QUALITY DATA BRANCH CHIEF MAGLIANO: This is
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Karen Magliano.
In the ports network, for example, in the South
Coast, that's a comprehensive network that has multiple
pollutants that are measured.
Around the refineries it's simply focused on SO2
and then some hydrogen sulfide monitoring because of
issues about odors. But Bay Area has said there's the
possibility that those networks could be expanded if there
was strong interest.
CHAIRPERSON NICHOLS: And once you've got the
sites, other things are possible too.
BOARD MEMBER BALMES: Right.
CHAIRPERSON NICHOLS: So I think this is good
stuff, just to let you know.
BOARD MEMBER BALMES: Yeah, I have to confess
that I was on the Clean Air Scientific Advisory Committee
panel that reviewed the SO2 standard. And the first
research I ever did with a air pollutant was on SO2 , and
showed that even short exposures could lead to
exacerbations of asthma. So I was really pleased that EPA
finally came up with a standard that protects asthmatics.
But I'm also glad to see that we basically don't have a
problem here in California --
CHAIRPERSON NICHOLS: Yes, for once.
BOARD MEMBER BALMES: -- with regard to
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enforcement.
CHAIRPERSON NICHOLS: Yes, Ms. Berg.
BOARD MEMBER BERG: It just occurred to me that,
in reading -- or listening to the facilities that you
listed, that these facilities are going to fall under the
requirement under AB 32 to do some review of their
pollutants and come up with scenarios that they might be
able to reduce those pollutants. And I was just wondering
if additional requirements -- if we go back and look at
what they're required to do under that requirement, that
we are trying to keep things homogenized as best as
possible and not keep them in silos. So it would seem to
me that SO2 would certainly fall under that requirement.
And so whatever modeling they're doing there, does it
apply to this, or will this modeling apply to that? So
that we're not asking them to do an entire different study
that is going to be duplicative cost -- it'll double cost.
And so have we taken a look at things like that?
BOARD MEMBER BALMES: That's the industrial
audit, I think you're referring to.
CHAIRPERSON NICHOLS: That's what I was
wondering.
DEPUTY EXECUTIVE OFFICER FLETCHER: I think it's
the industrial audit measure that you're looking at. And
the modeling that -- they're not really doing modeling in
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this context where they're estimating the fence line or
near-term concentrations of SO2 . In the industrial audits
measure what they're doing is going through and looking at
the emissions of various units within the facility,
whether it's a refinery or cement plant, and looking at
ways -- you know, first of all what is the energy
efficiency of the individual units within there? And then
looking at the technology that could be applied to reduce
that both from a greenhouse gas and a criteria
pollutant -- criteria and toxic pollutant.
So I don't think there's a conflict here in terms
of what's required.
CHAIRPERSON NICHOLS: But there is a connection.
And the question is --
DEPUTY EXECUTIVE OFFICER FLETCHER: There's a
connection but not a requirement.
CHAIRPERSON NICHOLS: -- is there some
potential --
BOARD MEMBER BALMES: Synergy.
BOARD MEMBER BERG: I just think we need to be
mindful as the same people are popping up, you know,
because they're the ones that are going to be the larger
emitters. And I just think we need to be mindful how can
we look at our roles to be able to get the most bang for
their buck. And I just would appreciate if staff could
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keep that in mind.
CHAIRPERSON NICHOLS: No, I think that's a good
point, especially when you're even just about multiple
communications coming from us; you know, first it's this
and then it's that. I can -- from the perspective of the
facility owner, it's going to look like something
uncoordinated and potentially more burdensome than it has
to be.
So I guess the question, or maybe direction to
staff, would be to take a look at how we're rolling out
these two items and see if there's some potential to
coordinate.
DEPUTY EXECUTIVE OFFICER TERRY: Maybe just one
quick comment.
The only requirement really imposed on California
that's new as a result of this process is the requirement
to do the air quality modeling specific to SO2 for those
34 facilities. In this particular case, the air districts
will be doing the modeling or else ARB. So there's pretty
limited impact on the facilities themselves.
BOARD MEMBER BERG: Thank you for that
clarification.
CHAIRPERSON NICHOLS: Okay. Good.
All right. If there's nothing more on this item,
thank you very much for the report.
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And we will move on to our last item, which is
also a regulatory item, which is proposed amendments to
the Oceangoing Vessel Clean Fuel Regulation. This
regulation has been in the process of being implemented
since July 2009 and requires ships within 24 nautical
miles of the California coastline to use cleaner burning
fuels.
The amendments that we're considering today were
developed with information that was learned during the
first year and a half of implementation. As many of you
will remember -- well, when this regulation was originally
adopted in 2008, the Navy raised a concern at the time
about the impacts of changes in vessel routing that might
occur as a result of the regulation. And at the time the
staff was directed to monitor the situation and report
back to the Board if ships posed a potential problem for
the operations at the sea range.
Unfortunately, it did. And the staff has worked
closely with the Navy and other stakeholders to develop
amendments that address the Navy's concerns, as well as
preserving the essential public health and air quality
benefits from this regulation, some of which you already
heard about just a minute ago when we were talking about
our progress on SO2 .
So the situation that we're facing is that there
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has been a change in vessel routing that's resulted in the
significant increase in the number of ships that are
making their way through the Navy's Point Mugu Sea Range
in southern California. And we're now in the process of
trying to address that.
For your information, I thought it would be
useful to ask the Navy to come join us today and give us a
short presentation about the sea range prior to the staff
presentation of the proposed amendments.
We have with us I, believe - I'm looking out
here - Capt. Sinofsky, who's here to make this
presentation. And I want to thank him for coming today.
And I'll ask Mr. Goldstene first to just
introduce the item.
EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman
Nichols.
As with any regulation adopted by the Board, ARB
staff monitor implementation. If information becomes
available to indicate that amendments are needed, we work
with stakeholders to develop amendments for your
consideration. This is the case for the Oceangoing Vessel
Clean Fuel regulation, as Chairman Nichols just indicated.
Amendments are needed to help address the change
in channel traffic patterns that have occurred -- in
vessel traffic patterns that have occurred in southern
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California and that are creating the potential for vessels
to interfere with Navy operations in the Point Mugu Sea
Range.
ARB staff worked closely with the U.S. Navy, U.S.
Coast Guard, and other stakeholders on this issue. Based
on the work, staff will propose amendments today that we
believe will reduce the potential for vessels to interfere
with Navy operations in the sea range and will help ensure
a successful transition to low sulfur fuels by aligning
the implementation dates of the regulation more closely
with recently adopted federal requirements.
These amendments retain the health protective and
air quality benefits originally anticipated from the
regulation.
I'll now ask Bonnie Soriano of the Stationary
Source Division to present the staff's proposal.
Bonnie.
(Thereupon an overhead presentation was presented
as follows.)
STAFF AIR POLLUTION SPECIALIST SORIANO: Thank
you, Mr. Goldstene.
Good morning, Madam Chairman and members of the
Board.
Today we are proposing for your consideration
amendments to the Oceangoing Vessel Clean Fuel regulation.
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--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: I have a
brief presentation that will provide a background on the
regulation, describe the amendments we believe are
warranted, discuss the impacts from those amendments,
propose one 15-day change, and then provide conclusions
and recommendation.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: Now a
brief overview of the regulation itself.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: The
Oceangoing Vessel Clean Fuel Rule was approved by the
Board in 2008 and began implementation in July 2009, and
that's about two years ago. It requires ships to use
cleaner marine distillate fuels instead of the dirtier
residual fuel that they typically use. Ships are required
to use the cleaner fuels within a clean fuel zone that is
approximately 24 nautical miles off the California
coastline. And that is shown in this figure on the slide
as the lighter blue region along the California coastline.
The fuel requirements are implemented in two
phases having progressively lower fuel sulfur limits.
Phase 1, which began July 2009, requires the use
of either marine gas oil or marine diesel oil. The marine
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diesel oil is capped at .5 percent sulfur.
Both of these are distillate fuels. We are
finding that on average the marine distillate fuels that
the ships are using to comply with this regulation average
about .3 percent sulfur.
Phase 2 is scheduled to begin in January of next
year, 2012, and establishes a fuel sulfur requirement of
.1 percent.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: This
regulation is a critical measure in our efforts to improve
air quality and protect public health. It contributes
over half of the reductions from new measures in the South
Coast's 2014 PM2.5 attainment demonstration.
It is also a key measure in the ports of Los
Angeles and Long Beach clean air plan and reduces the
public's exposure to diesel PM from ships by over 80
percent.
Because it is a clean fuel requirement, the
benefits of the regulation begin immediately upon
implementation. And over the past two years, the use of
cleaner fuels has reduced emissions of sulfur dioxide,
which I'm going to short cut as SOx through the rest of my
presentation, by 73 tons per day; PM, which is particulate
matter, by 8 tons per day; and NOx by 8 tons per day.
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This translates to about 6,000 tons of both PM
and NOx and 50,000 tons of SOx reduced over the last
two years.
While about 90 percent of the emissions benefits
are realized with the Phase 1 fuels, the Phase 2 fuel
requirement will also provide additional benefits of about
2 tons per day PM and 17 tons per day of SOx.
When you approved this regulation, it was the
first comprehensive ship fuel requirement in the world.
And as I'll discuss a little later, since that time
federal and international fuel requirements have been
adopted.
California's regulation is a critical bridge to
these federal requirements that will be equivalent to our
Phase 2 0.1 percent requirement in 2015.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: Now I'll
discuss the proposed amendments.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: Overall,
the implementation of this regulation has been going very
well. We estimate that there have been over 19,000 ship
visits since July of 2009, and we are seeing well over a
95 percent compliance rate. However, we have encountered
some challenges that warrant the need for amendments.
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One of the things that has happened is that the
traffic patterns have changed in southern California.
This is because many vessel operators have elected to use
a route outside the regulatory zone where they're not
required to use the cleaner fuel. This has resulted in a
significant increase in traffic through the Navy's Point
Mugu Sea Range and according to the Navy has increased the
potential for vessels to interfere with naval testing and
operations.
There have also been some operational challenges
that have resulted in a small number of temporary loss of
propulsion incidents, mainly related to the lower
viscosity of the clean fuel.
And, last, as I mentioned before, there are new
federal and international requirements. While this is not
necessarily a challenge, it does present an opportunity to
better align the California program with federal
requirements, which we think will facilitate successful
implementation of both programs.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: Over the
past two years, we have worked closely with the maritime
industry, the Navy, the U.S. Coast Guard, and local
districts in implementing the regulation and in developing
the proposed amendments to address the issues that I have
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described.
Our objectives in proposing the amendments are:
To minimize the impacts on the Point Mugu Sea
range;
To facilitate a more successful transition to the
cleaner .1 percent sulfur fuel; and
To make other minor adjustments to the regulation
that we believe will help with implementation.
In the next few slides, I will describe the
amendments we are proposing and our rationale.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: First,
we think that it is very important to do what we can to
minimize the potential impacts to the Navy's Point Mugu
Sea Range from the increased vessel traffic. To do this,
we are proposing to expand the clean fuel zone in southern
California. By expanding the clean fuel zone, we
eliminate the cost advantage of using routes through the
Point Mugu Sea Range. If this is done, we believe that
the vessels will return to the historical routes they used
before the regulation was implemented, lessening the
potential for vessels to interfere with the military
operations.
In addition, because the vessels will be using
the cleaner fuel, the emission reductions originally
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anticipated in this region will be regained.
And now I'll provide you with some background on
the need for this amendment.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: In this
slide, I will walk you through the changes in traffic
Patterns in southern California. So I'm starting here
with the region, which is about from the tip of Santa
Barbara to the ports of Los Angeles and Long Beach. The
Channel Islands are shown. And the large overwater areas
shown in bright blue are the Navy's Point Mugu Sea Range.
The Santa Barbara Channel route is now shown as
the dark blue double line. This route is a long-standing
traffic separation scheme that extends the length of the
Santa Barbara Channel and is listed on NOAA and nautical
charts. It is the only International Maritime
Organization-approved routing measure in this area. And
it was established to reduce the risk of collisions by
separating arriving and departing traffic.
This route is also typically the shortest route
for both traffic arriving from Asia on the Great Circle
route and traffic to and from northern California.
As shown in the gray area, the current clean fuel
rule extends out to about 24 nautical miles off the
coastline. Vessels operating in this zone must use the
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cleaner fuels.
After implementation of the rule, many shippers
have increasingly chosen to transit through the Point Mugu
Sea Range outside the clean fuel zone. We have depicted
the transit through the sea range and called it the outer
route. It is the red line on the southwest side of the
islands.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: As shown
in this figure, since implementation of the regulation
began there's been a steady increase in the number of
vessels that have elected to transit through the Point
Mugu Sea Range.
This chart shows the change in the percentage of
vessels to the ports of L.A. and Long Beach that transit
through the sea range. As you can see, historically about
seven percent of the traffic used to transit through the
sea range. That has now increased to about 50 to 60
percent of all port vessel visits.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: We
believe the changes in vessel routing are primarily driven
by the fuel cost difference between the two routes. The
cost of the channel route is about $3,000 higher since the
more expensive fuel is required for that entire portion.
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As you will hear in their presentation, the U.S.
Navy has raised concerns about the higher number of
vessels transiting in the sea range, as it has increased
the potential for vessels to impact exercises and
operations that take place in the sea range.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: In this
map, I will describe the proposed amendments to the clean
fuel zone. So we are starting here at the same place we
left off in the last map slide. And this shows the
current clean fuel zone in gray, the channel route in the
double line in blue, and the outer route in red.
We propose to expand the zone out past the
Channel Islands in southern California. The expanded zone
is consistent with the contiguous zone, which is a well
realized zone on nautical charts.
We also propose to exclude a small area of the
contiguous zone from the clean fuel requirement. We have
referred to this area as a window.
The purpose of the window is to equalize the
distance that the clean fuel is required for the two
routes and correspondingly equalize the fuel costs.
With these changes to the boundary in southern
California, we believe vessel operators will return to the
Santa Barbara Channel route and lessen the potential
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impacts on the Point Mugu Sea Range.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: The
second amendment I will discuss is a proposal to extend
the Phase 1 fuel requirement by two years and to begin
Phase 2 in 2014. While we are fully committed to reaching
the Phase 2 limit of .1 percent sulfur and believe it to
be technologically and operationally feasible and cost
effective, we do think that there are valid reasons to
adjust the timing for the implementation of the Phase 2
requirements.
We believe that taking a little longer will help
facilitate a successful transition to the cleaner 0.1
percent fuel and still allow us to meet our SIP
commitments. It will simplify integration of state and
federal requirements and provide additional time to
address operational and fuel issues.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: Since
the adoption of the OGV rule, as I mentioned before,
federal and international standards have been established.
And just to give you some idea of these standards, in
March of 2010, a North American Emission Control Area - or
I'll call this the ECA - was approved. The ECA requires 1
percent sulfur fuel, and it can be either heavy fuel or
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distillate, beginning in August 2012 and then a 0.1
percent sulfur fuel beginning in January of 2015. The ECA
zone is about 200 nautical miles from the U.S. And
Canadian coastline.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: Moving
the Phase 1 out by two years will more closely align our
Phase 2 implementation date with the ECA Phase 2
requirement, and also it will help to avoid having vessel
operators manage different federal and state fuel
requirement changes in 2012.
The extension will also allow time for
coordination with the U.S. EPA, U.S. Coast Guard, and
others during the transition to the 0.1 percent sulfur
fuel requirement.
The extension will not impact the significant
benefits that are achieved with the Phase 1 fuels. And as
a reminder, over 90 percent of the emission reductions
from the regulation are realized with the Phase 1 fuels.
The two-year extension is also consistent with
our 2014 SIP commitment for South Coast.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: The
proposed Phase 2 extension also provides additional time
to address operational issues such as temporary loss of
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propulsions. And I'll call those LOPs. With about 19,000
successful vessel visits since the regulation began, the
Coast Guard has reported that a small number of vessels -
and this is about 2 percent of all vessel visits or about
38 vessels - have experienced loss of propulsion incidents
related to the use of distillate fuel.
During the last two years, ARB has worked closely
with the Coast Guard, Harbor Safety committees, the Office
of Spill Prevention to address these operational issues.
Under contract to the Air Resources Board, the
California Maritime Academy investigated the LOPs and
identified primary areas of concern. CMA identified that
an area of concern was low fuel pressure related to the
low viscosity of the distillate fuel.
The extension in Phase 1 provides additional time
to investigate causes and determine solutions for the loss
of propulsion incidents prior to implementing more
restrictive fuel requirements.
The extension also provides more flexibility to
find fuels with higher viscosity levels since Phase 1 is
less restrictive, and provides more time for recent
viscosity related enhancements to the fuel specifications
to more fully reach the marine fuels market.
And that leads me on to our third objective.
--o0o--
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STAFF AIR POLLUTION SPECIALIST SORIANO: To
further assist implementation, we are also proposing other
minor amendments, such as the incorporation of a revised
fuel standard that has enhanced viscosity and lubricity
specs, that I just mentioned in the last side, and an
updated nautical chart.
We are also proposing changes to the
noncompliance fee provision, which I'll discuss more in
the next slide.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: The
noncompliance fee provision allows vessel operators to pay
a fee instead of direct compliance. And it is limited to
very special circumstances that are beyond the master's
reasonable control, such as unplanned redirection at sea
or purchase of defective fuel. This provision is not a
fine or a violation, and it has only been used five times
since the rule began. It also requires ARB approval prior
to use.
We are proposing to restructure the fees to
encourage purchase of a compliant fuel on arrival to
California by having the fee in that situation.
We propose to retain the same fee for a single
port visit, but adjust the fee structure for multiple port
visits.
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Staff believes that the proposal is a more
reasonable fee structure. And even with these proposed
amendments, all noncompliance fees are at least one and a
half times higher than the cost of direct compliance would
be if the vessels were using the fuel.
We do not think that these changes will result in
increased use of this provision, as we are not proposing
any changes to the criteria that specify when the
noncompliance fee can be used. And these criteria are
very restrictive.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: So now
I'll go over the impacts of the proposed amendments.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: The
charts on this slide show the projected PM on top and the
SOx emissions on the bottom until 2015. The base line
with no rule is shown in green, the current regulation is
shown in blue, and the proposed amendments in red.
As you can see from the charts, the proposal
retains the emission reductions projected for the current
rule for both PM and SOx, and emissions continue to
decline in subsequent years.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: We also
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saw in the previous slide the protected emission
reductions are greater statewide with the proposed
amendments than with the current rule. However, due to
the Phase 1 extension, the benefits are slightly lower in
2012 and 2013. In that two-year period, the emissions
will still continue to decline, just not as quickly. And
the remaining emissions are far lower than originally
anticipated, in part due to the recession.
Staff has also evaluated the potential impacts to
whales in the southern California region due to the
anticipated increase in vessel traffic using the channel
route. We found that the impact will be similar to what
it was before the regulation where the vessels primarily
used the channel route.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: The
total estimated costs of the proposed amendments are $10
million per year in 2012 and 2013 and $47 million per year
in 2014.
The proposed amendments do provide cost savings
compared to the original rulemaking primarily due to the
extension of the Phase 1.
The cost effectiveness of the proposed amendments
is about $16 per pound of diesel PM reduced, which
compares favorably to many other regulations adopted by
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the Board.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: I will
now cover our proposed 15-day change.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: We have
identified one 15-day change that will help further
integrate our regulation with the ECA. To align
California's Phase 1 with the ECA Phase 1 sulfur
requirement, we propose to include a 1 percent fuel sulfur
limit for our Phase 1 marine gas oil. We propose that
this requirement begins August 1, 2012, to coincide with
the ECA Phase 1 implementation date.
We do not expect this change to impact the
regulated industry since Phase 1 complaint marine gas oil
averages .3 percent, well below the one percent proposed
limit. And inspection records show that 98 percent of the
Phase 1 compliant fuels sampled by our enforcement staff
are below 1 percent sulfur.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: In
conclusion, we believe the proposed amendments will assist
in the successful transition to 0.1 percent sulfur fuel.
The amendments will lessen the potential for impacts on
the Point Mugu Sea Range by removing the economic
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advantage that drives the route changes in southern
California.
The amendments will also provide the benefits of
additional time to address operational issues that have
been encountered and better integrate state and federal
programs.
The amendments before you today also continue to
fulfill our 2014 SIP obligation and are cost effective.
--o0o--
STAFF AIR POLLUTION SPECIALIST SORIANO: We
recommend that the Board adopt the proposed amendments
with the suggested 15-day change.
We also recommend that you direct staff to work
with the Navy to monitor vessel traffic trends through the
Point Mugu Sea Range, and also to continue to work with
the U.S. Coast guard and the maritime industry to monitor,
investigate, and evaluate any fuel-related issues.
This ends our presentation. And I would now like
to thank you for your attention.
And now Richard Corey will introduce the U.S.
Navy's personal.
STATIONARY SOURCE DIVISION CHIEF COREY: Yes, now
we're asking Tony Parisi, Randy Friedman, and Captain
Cudnohufskyto join us for a presentation on the Point Mugu
Sea Range.
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And it will be Captain Sinofsky with the Naval
Air Systems Command that will give the presentation.
CHAIRPERSON NICHOLS: Thank you. Welcome.
CAPTAIN CUDNOHUFSKY: Good afternoon. How are
you?
CHAIRPERSON NICHOLS: Good afternoon.
CAPTAIN CUDNOHUFSKY: So what I'll be doing this
afternoon is just talking about our mission as NAWCWD as
well as the sea range and how this is impacting our
operations.
(Thereupon an overhead presentation was presented
as follows.)
CAPTAIN CUDNOHUFSKY: So the first slide shows an
overview of the Point Mugu Sea Range. And it's part of
the NAVAIR West Coast ranges systems, a very integral
part. The connecting part is what we call the IR 200
corridor that we can activate at different times to
support missions when required.
The sea range provides safe, operational, and
realistic environment for us to test and training --
testing and training for mainly naval air systems, but we
also cater to all weapon systems for DOD and our allied
counties as well.
Our core mission is mainly testing, training, and
experimentation associated with primarily air warfare
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systems.
--o0o--
CAPTAIN CUDNOHUFSKY: So as I said, it's
primarily providing a realistic open-air-range
environment. It's 36,000 square miles of sea range. And
it can be expanded as required to accommodate additional
testing. For example, the Missile Defense Association
when we work with some of their programs requires a much
larger range. So we'll expand the range to accommodate
those type of tests.
We have operations and range control complexes
that support the operation of the sea range and we have
extensive instrumentation throughout the sea range. The
TSPI is time, space, and position instrumentations.
We have sophisticated data processing and display
systems, as well as air and sea targets that we can
incorporate throughout the range.
Range safety and security and environmental
support is extensive throughout the range complex systems,
and we have a whole host of support aircraft for our
missions.
--o0o--
CAPTAIN CUDNOHUFSKY: We're the nation's largest
and most capable instrumented sea range. We're ideally
suited for our missions that we perform out there to
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provide the nation with its air and sea weapons to defend
our nation.
It's ideal location where we are supported by the
natural features such as the islands, San Nicolas Island,
Santa Rosa Island, the Laguna Peak where our
instrumentation is elevated well above the sea level, over
a thousand feet, and look well into the range.
Supports a broad array of testing and training
scenarios. And I'll talk a little bit more about that
later. But, again, primarily we're supporting the
research, development, acquisition, testing and evaluation
of our weapons, our nation's weapons.
Not only do we support and test and train our
Navy's weapon systems, but also all of DOD - Air Force,
Army, Marine Corps as well as other international
countries that are our allies.
--o0o--
CAPTAIN CUDNOHUFSKY: This cartoon provides you a
little bit of insight into the type of -- a typical type
of a mission we would do out on the sea range. We'd have
the flight test vehicle performing out in the range and
we'd have multiple instrumentation that would track it.
And the TM is telemetry. That provides us the
health and welfare and safety aspects of that vehicle.
And that's all sent back to our range control back at
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Point Mugu and then San Nicolas Island. And then through
fiber optics and microwave connections, we're completely
integrated with all of the instrumentation and sensors.
--o0o--
CAPTAIN CUDNOHUFSKY: This depicts a little bit
of a typical type of a hazard pattern that would be
associated with a test or a mission that we would do out
there. So different colors would indicate different type
of tests that we would do. So when we're testing a
particular air vehicle perhaps, launching it from Point
Mugu, there would be an associated hazard pattern that
would be associated with that weapon. So before the
launch of that weapon, we'd clear that air zone and the
sea zone, make sure it's completely clear of ships,
nonparticipants, and ensure that it would be cleared for
however long the window that our mission would take place.
So, you know, a ship typically moves 12 to 15
knots. We'd go out -- if it was a two-hour window, we'd
go out 30 miles beyond the hazard pattern and make sure
that no ship would be able to move within that pattern as
we had cleared it.
So some of them are smaller hazard patterns.
Some are quite large and extensive.
--o0o--
CAPTAIN CUDNOHUFSKY: This is a depiction of the
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type of operations that we would do it out on the sea
range. We'd typically have about 17,000 events per years.
The red is training events. The blue,
operations. And green is RTD&E, research, test,
development, and experimentation. And the yellow would be
maintenance, maintenance of our sea range boats or
aircraft that we'd need to do out on the sea range.
--o0o--
CAPTAIN CUDNOHUFSKY: Of course with any type of
an operation we'd do out there, safety is paramount, and
we're very serious about that and have a very good safety
record.
And it's very -- we take great pains to make sure
that the evolution is safe. And part of that is clearing
that range with our aircraft, making sure no one -- no
nonparticipants are within there. And if we do happen to
get what we call an interloper, somebody that doesn't
belong in there, we'll cease all operations until we can
clear the range and make sure we have a safe environment
to conduct our tests.
And we have extensive instrumentation to be able
to help us do that and monitor what's out there and what
should and should not be out there.
--o0o--
CAPTAIN CUDNOHUFSKY: So this is very similar to
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the chart you had seen in the previous presentation, with
the channel in green. And then what we've been observing
with the red alternate shipping route that we've seen that
interferes with the operations that the Navy does out on
the sea range. As the ships divert out of the channel,
they transit across the sea range, which then impacts our
operations, causing either delays or cancellations in our
operations.
--o0o--
CAPTAIN CUDNOHUFSKY: And to that extent, this
next chart shows, again very similar to the chart you'd
seen on the previous presentation, what we've observed on
that behavior. So on the far left what we are seeing is
one inbound and one outbound ship per day. And since that
time of 1 July in 08 until present it is now up to seven
to seven and a half times what we had seen historically.
So a significant increase in shipping across the sea
range.
--o0o--
CAPTAIN CUDNOHUFSKY: To help mitigate some of
this, we've done extensive coordination with the shipping
industry through L.A. and Long Beach, a marine exchange
from our Ops conductors.
Through our surveillance of the sea range, we
have redirected the ships that were in the area. And that
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typically results in quite a delay into the mission.
Ships moving at 12 knots, it takes sometime to transit
across the sea range. They can't just turn around or, you
know, accelerate there. So typically it's an hour or
several hours of delay into a mission, which represents a
significant cost.
And we tried to minimize operational impacts.
But to that extent there's only so much we could do to
mitigate that.
--o0o--
CAPTAIN CUDNOHUFSKY: And our concerns obviously
in the future, what we see if we're unable to get the
shipping behavior back into the channels, we're going to
see increased transits through the sea range, which
obviously have impacts into our mission.
As hopefully our economy recovers, I think it
will be more incentive perhaps if we don't get this
regulation in place, that these ships will continue to
divert the channel.
Some of the delays and cancellations will be
inevitable, will increase costs to the programs. As the
economy and our budgets are all shrinking, that's a
significant impact into our programs and our ability to
bring these needed weapons online.
And the perhaps intangible costs are the training
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events that are taking place out there for our military
are unable to be completed. So we deploy our military
without the really benefit of the needed training that
would have been accomplished, if they're impacted and are
unable to do their training due to ships through the sea
range.
--o0o--
CAPTAIN CUDNOHUFSKY: And, in summary, again
Point Mugu Sea Range and the missions that we complete out
there and the testing and evaluation, support that
acquisition programs for the weapon systems that we bring
online, it's critical that we are able to conduct those
tests and evaluations and training on time and when
needed.
As an example, the Joint Strike Fighter Program
operates at a burn rate of about $30 million a day. So
every day that they're unable to collect the needed data
to continue to progress the program, it essentially will
cost the program $30 million. Obviously not every program
is such a substantial program. But all programs have a
limited budget in order to operate and complete their
programs and bring these weapons online. So it is a
significant impact.
Increase in ship traffic through the sea range is
impacting our ability to test and train. We've been
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working with the shipping industry and there's significant
coordination that's been taking place to try and mitigate
these impacts. But as you can see, the data says that it
still is an impact for us.
And as the economy improves, the shipping
industry will probably -- we'll see more and more traffic.
And if we're unable to keep them in the channel, the
results will be more impact into our mission.
So our recommendation is to approve the
modification to the low sulfur regulation.
CHAIRPERSON NICHOLS: Thank you very much.
CAPTAIN CUDNOHUFSKY: More than happy to take my
questions you might have.
CHAIRPERSON NICHOLS: Thanks.
I want to express my appreciation. I understand
this has taken a lot of time and effort on your part, on
the Navy's part, as well as on our staff. And the fact
that you were willing to work together with us to try to
achieve our mutual objectives here is really much
appreciated. I know that in the past sometimes we've
seemed like the two agencies were just not able to get on
the same page. And I really appreciate how hard you've
worked to try to make sure that that can happen.
I know it was really tough for the staff to face
the possibility of a loss of the emissions benefits from
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this rule. And the fact that I think we've been able to
design a way to do this that does not involve a sacrifice
there is really terrific. It's a great outcome.
So I don't know if anybody has any questions now
or we can just hear from the witnesses. If that's okay,
we'll just go straight to the witnesses.
We do have a number of people who've signed up to
testify.
And you're welcome to stay up here if you would
like.
We'll start with Michael Villegas from Ventura
County APCD and then Kathy Long and Jonathan Sharkey.
And we do have your written, Supervisor Long.
MR. VILLAGES: Chair Nichols, members of the
Board. I'm Mike Villegas, Air Pollution Control Officer
for Ventura County.
Ventura County APCD staff is pleased to support
the California Air Resources Board staff proposed changes
to the regulations for oceangoing vessel fuels. These
proposed amendments will achieve nearly all the emission
reductions that were envisioned when this rule was
originally adopted in 2008.
The 83 percent reduction in toxic diesel
particulates will provide a significant health benefit to
Ventura County residents. Further, we will be achieving
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reductions in sulfur dioxide and nitrogen oxides.
In addition, the proposed amendments will do away
with the economic incentive for vessels to pass through
the Navy's test range. And this should prevent disruption
of the Navy's operations.
We've also reviewed the rationale for the delay
in the Phase 2 sulfur standards. And we believe the delay
is reasonable based on the fact it will better harmonize
CARB's requirements with the ECA requirements. Also will
give time for the development of additional fuels that
will comply with the new ISO standards, which are going to
address viscosity and lubricity for those engines, which
should help with loss of power.
In addition, we reviewed the proposal to reduce
the noncompliance fees. And we believe this proposal once
again makes sense. These provisions have been used only
five times in over 18,000 port visits. Further, there's
is no cost advantage to using the noncompliance fees
versus complying with the rules, so we believe it makes
sense.
Lastly, I need to note that the Air Pollution
Control board for Ventura County has submitted a letter of
support for these regulations.
CHAIRPERSON NICHOLS: We have that.
MR. VILLEGAS: Thank you.
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CHAIRPERSON NICHOLS: Thank you very much.
Supervisor Long.
SUPERVISOR LONG: Yes, good afternoon. And thank
you, Madam Chair and Board members.
It is my pleasure to be here to speak to this and
to certainly support the staff recommendation strongly on
behalf of Ventura County. I thank the staff, applaud them
for their efforts in working with the stakeholders. I
believe we have a win-win recommendations with the
amendments.
I'm here representing as Co-chair of the Regional
Defense Partnership for the 21st Century, RDP-21. It's a
community-based organization in Ventura County that has
been around for over ten years supporting our naval base
in Ventura County for the many assets, both the military
strategic importance of the base, but also for the
economic driver that the base is for all of us, and the
environmental stewards that they are.
And so the RDP-21 represents both public and
private. It has all ten cities in the county. It has
other electeds, such as Senator Fran Pavley is very
supportive, and our Congressmen, both Capps and Gallegly.
And certainly our goal is to provide and educate
our community, engage them in understanding what the
values of the base are. And as the base has been, and as
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all bases in prior BRACs have been, threatened with
closure for a variety of reason, the reason that we've
been able to stand so strong with our base is the sea test
range and the value that it brings both again for the
military importance but also the economic engine that it
is for all of our county.
We have more than 19,000 personnel, military and
civilian, who are working at that base. So you can
understand what the multiplier of that is to our local
economy: Over 20,000 at least jobs and the multiplying
benefit of $1.2 billion in goods and services, and the
fact that it continues to be such an important part in
bringing new business to the base. And that does occur
with the test range.
RDP-21 is very supportive of the oceangoing
vessel fuel rule. We certainly are supportive of
everyone's goal to have clean air. And as I said at the
beginning, this is a win-win to be able to carry this
amendment through with the good work and the cooperation
of the stakeholders to applaud that effort and to ask for
a strong "yes" vote in support of this.
Thank you for your time and your work on this.
We appreciate it. Thank you.
CHAIRPERSON NICHOLS: Well, thank you for coming.
Jonathan Sharkey, a council member from Port
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Hueneme.
Welcome.
MR. SHARKEY: Yes, good afternoon, Madam Chair,
members of the Board. I'm Jon Sharkey, Port Hueneme City
Council, member of the Ventura County Air Quality Control
Board, and a member of the Regional Defense Partnership.
And coming third in the group, it's all been
said. But I would like to personally thank the staff
here, who's done a marvelous job in solving a problem.
Clearly the previous rule did not achieve its objectives.
We believe this new rule will achieve the air quality
objectives and will reduce the impacts on naval base,
Ventura County, a large part of which sits in my city.
So thank you all.
CHAIRPERSON NICHOLS: Thanks for coming.
Henry Pak from Hanjin Shipping, followed by
Martin Schlageter and Henry Hogo.
MR. PAK: Good afternoon, Chairwoman Nichols and
all the Board members.
First of all, on behalf of our company, Hanjin
Shipping Company, I'd like to thank you for allowing us to
express our concern. And it's going to be very short.
We are not opposing to anything else but the
implementation date of Phase 2. I understand that it's
been pushed back to 2014 January from the initial starting
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date of 2012 January. But we believe that -- or we feel
that the implementation date should be conformed with the
further requirement, which is 2015 January, which allows
one more year -- or one additional year for carriers to
prepare.
And in line with that, considering fuel suppliers
comment and our company's research, there is no fuel
supplier that can supply 0.1 percent sulfur distillate
fuel in the region of eastern Asia and in America. In
this regard, be advised that sufficient market surveys and
technical verifications should take precedence in order to
confirm the possibility and availability of the low sulfur
fuel in those regions by 2014.
And, in addition, we need to ensure that there is
sufficient infrastructure to supply low sulfur fuel
without difficulties. And that is our concern, and I
would appreciate it if you give second thought to that.
Thank you.
CHAIRPERSON NICHOLS: Thank you.
I'll ask staff to respond later.
Martin, Welcome.
MR. SCHLAGETER: Thank you so much. Martin
Schlauggeter with the Coalition for Clean Air. Thank you,
Madam Chair and Board members and staff for considering
this today.
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This ship fuel rule since it was initiated a few
years ago is one of the most impactful things this Board
has done in my view, in part because it has helped shape
globally shipping practices. And there's been a lot of
reference here to aligning with ECA standards. I don't
want to lose sight of the fact that one of the main
reasons we have this ECA adoption is because of what
California's been doing under your leadership.
So I'm very much in support of the extension of
this clean fuel zone and appreciate the fact that staff
acted so promptly in addressing the issues of carriers
avoiding that zone.
This change will, we expect, help bring into --
essentially bring into compliance and gain the emissions
reductions that were expected from carriers who are now
skirting this zone, interfering with the Navy, and
unnecessarily polluting.
Certainly, we are not excited about a delay to
2014. We and the public health and environmental
community are impatience. We like to see emissions
reductions that are on the table and that we had hoped
would be achieved immediately. What I -- sort of the
lemonade that I'd like to suggest we make out of that
delay, if we could, is to complete the rulemaking of which
initial steps were taken back in 2008 on vessel speed
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reduction. By setting speed limits on ships, we can
control some of the unnecessary pollution, we can optimize
fuel use and reduce greenhouse gas pollution and indeed
hopefully minimize some of the whale strikes that was also
referenced here today.
It's my belief that if we get to work on that -
and this has been something languishing over the past
couple of years - it's my belief with Board direction, if
we can complete this rulemaking on vessel speed reduction,
then at 2014 when carriers comply with fuel rules, they
can also plan simultaneously for their timelines, their
ship speeds, their logistics in that regard. And much was
referenced by Ms. Berg in the last presentation, be giving
a clear and concise package of instruction to carriers.
And I thank you so much. I encourage your action
on that.
I have already submitted to the clerk a petition
of more than 450 signatures that we've gathered over the
past month out of interest in this speed limits issue.
So thank you so much.
CHAIRPERSON NICHOLS: Thank you.
All right. Henry Hogo, followed by Cooper
Hanning and Diane Bailey.
MR. HOGO: Good afternoon, Chairman Nichols and
members of the Board. I'm Henry Hogo, Assistant Deputy
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Executive Officer of the South Coast Air Quality
Management District.
I'm here to express the South Coast AQMD staff's
support for the extension of the regulatory boundary
beyond the current 24 nautical miles to ensure that
oceangoing vessels use the cleanest fuel possible. And we
would encourage you to adopt that today.
Relative to the delay in the use of .1 percent,
we just want to express caution in this delay. We would
want to encourage that marine vessel operators use the .1
percent as early as possible so we can understand some of
the issues related to it and closely monitor it. But we
don't want to see this delay go beyond 2014 because it is
a critical element of our 2007 AQMP.
Thank you.
CHAIRPERSON NICHOLS: Thank you. I appreciate
that. And it's just useful to observe that we've had
examples in the past of at least one major shipper that
introduced lower sulfur fuel long ahead of a requirement.
So it is possible for that to happen or to be encouraged,
and we should try to make that happen.
MR. HOGO: Thank you.
CHAIRPERSON NICHOLS: Okay. Mr. Hanning.
MR. HANNING: Good afternoon, Chairman Nichols
and members of the Board. My name is Cooper Hanning and I
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represent the Natural Resources Defense Council.
We thank the Air Resources Board for acting to
reduce emissions from oceangoing vessels by expanding the
clean fuel zone beyond the Channel Islands and for
providing incentives for ship operators to bunker with
clean fuel as soon as possible upon arrival at a
California port.
We also encourage the Board to consider
additional regulations such as vessel speed reduction,
which can reduce pollution in our communities and protect
residents' health while decreasing California's greenhouse
gas emissions.
Oceangoing vessels account for a tremendous
amount of toxic pollution in our state. In 2006 ships
were estimated to contribute 18 percent of diesel
particulate matter in California. Diesel particulate
matter is associated with a growing list of adverse health
outcomes, and these outcomes are most common in children
and the elderly. The negative health impacts are
concentrated in neighborhoods closest to the ports and
these communities are disproportionately bearing the
burden of pollution from oceangoing vessels.
This pollution can be considerably reduced via
vessel speed reduction. The Board should promulgate a
regulation to limit ship speeds to 12 knots within 40
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nautical miles of shore for all ship traffic in California
waters. Slower ship speeds will reduce harm to marine
life, cut greenhouse gas emissions, and reduce toxic air
pollution in California.
In 2009, Air Resources Board staff estimated
emissions reductions for a 12 knot speed limit applied to
all vessels within 40 nautical miles of shore. Such a
regulation would decrease diesel particulate emissions by
5.2 tons per day. California would also see daily
reductions of 40 tons of nitrogen oxides and 43 tons of
sulfur oxide.
The Board should combat this pollution by
preserving existing regulations and adopting further
measures such as vessel speed reduction.
CHAIRPERSON NICHOLS: Thank you.
Ms. Bailey.
MS. BAILEY: Good afternoon, Chairwoman Nichols,
members of the Board, and staff. My name is Diane Bailey.
I'm a senior scientist with the Natural Resources Defense
Council. And as my colleague Cooper noted, we're here
today in very strong support of the clean shipping fuel
regulation and particularly the amendment to extend the
clean fuel zone.
As you know, NRDC has been to court with you to
help defend these very important regulations several
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times. And we're happy to say that the courts
resoundingly agree that California has the right to
protect its coastal residents from the major health
hazards associated with oceangoing vessels and the toxics
laid in bunker fuel that has been used in the past.
California's clean fuel zone for international
ships is one of the cornerstones of statewide emission
reductions from this shipping sector, and it's really an
important step to curb the pollution that comes into our
state with the shipping to our ports, our rail yards, our
distribution centers. This was really one of the biggest
steps in reducing premature deaths from exposure to the
pollution. And so we applaud the effort to extend the
clean fuel zone and stem the 50 percent or so of ships
that were evading this requirement in the past entering
the ports of L.A. and Long Beach.
I want to note that we do have some concerns over
the proposed amendments. The tier delay of course does
carry somewhat of a penalty in terms of lost emission
reductions and health benefits. And I don't want to
exaggerate that, but I think that there are ways to make
up for it, as my colleague Martin offered that there are
ways to make lemonade today. And I really encourage you
to look at other measures. As Martin noted, the vessel
speed reduction measure has really languished. This is a
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measure that can deliver tremendous environmental benefits
from significant greenhouse gas reductions to marine
mammal and wildlife protections, avoiding whale strikes
and such. And I encourage this Board to take up that
measure and really get it going.
We look forward to working with staff on further
implementation of the clean shipping fuel zone as well as
vessel speed reduction.
Thank you very much.
CHAIRPERSON NICHOLS: Thank you.
Randall Friedman, did you wish to testify again?
And Dan Krokosky and Bonnie Holmes-Gen.
MR. FRIEDMAN: Madam Chairman and Board members.
Randall Friedman on behalf of the Navy Region Southwest.
The Navy's long-standing position has been that
shipping regulation in the Santa Barbara Channel would
move ships into the sea range and threaten its mission
capability.
Today we are supportive of your staff's
recommendation to amend this rule and take action to
protect the Point Mugu Sea Range, as you indicated in the
final statement of reasons you would do in the initial
regulation.
We ask for ARB's continued commitment to work
with all stakeholders, for example, the ports of Los
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Angeles and Long Beach, to take all feasible measures to
further support the return of shipping to the Santa
Barbara Channel.
Finally, just a quick comment in response to the
vessel speed reduction. I would just strongly urge you
that in any consideration of this, please remember that if
you only do this in the Santa Barbara Channel, we'll be
right back here with the same problem. Anything to do
with regulation of shipping needs to be done globally and
consistently and take full accounting of the economics of
shipping, the time, and the value; and needs to not create
any sort of incentive that would make a transit through
our sea range more attractive than staying in the Santa
Barbara Channel where we all believe they belong.
Thank you. And again thanks to your staff for
all the work they've done.
CHAIRPERSON NICHOLS: Thank you. You could have
said, "I told you so."
(Laughter.)
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: He
has said that to us.
CHAIRPERSON NICHOLS: It was very nice.
(Laughter.)
MR. FRIEDMAN: I thought that was privileged.
CHAIRPERSON NICHOLS: It was appreciated.
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All right.
MR. KROKOSKY: Good afternoon. I'm Dan Krokosky
from Chevron Shipping. I'm the global bunker fuel and
efficiency manager for the fleet.
Chevron Shipping has a wide variety of ships that
are operating in and out of the zone on utra-low sulfur
diesel. We've been doing this in order to develop the
lubricants and technical expertise in order to be running
on this fuel.
We're in favor of all of the changes you're going
to make and we've been in support of the fuel change for
the entire time.
The one comment we'd like to add is to move this
change from 2014 out to 2015. One of the reasons is for
practicality of using this sort of three-fuel scheme,
which is really practically hard to deal with both in and
out of the zone.
It's also unlikely that anybody's going to sell
this 1 percent fuel. So that -- we'd also like you guys
to take a strong look at this idea of viscosity of fuel.
This is a very important safety aspect and ones that not
all shipping companies have the expertise that we do in
order to ensure they have the right viscosity. This could
lead to a lot of problems with reliability of the ship,
especially when you're maneuvering the ship. One of the
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big dangers is the ship will not start. And of course the
starting and stopping of the ship is what gives the ship
its brakes. So again we'd really like to see a good look
at this viscosity issue.
The other comment is, to overcome some of the
shortfall in that one year is -- use this idea of virtual
arrival, where you actually don't let any of the ships in
to wait around the port. We found this to be very
effective in just our own energy efficiency program. And
by actually timing the ship's arrival all in so that the
berths are open, you can save a lot of energy and fuel on
that.
So please take these comments under
consideration. Thanks again.
CHAIRPERSON NICHOLS: Thank you.
Just one question before you leave.
BOARD MEMBER D'ADAMO: Can you explain what you
are looking for in viscosity of fuels. Are you saying
that this additional time will give you the ability to
look into that, or is there something more that you think
that staff needs to do on this?
MR. KROKOSKY: I think you have an opportunity to
set a viscosity. You set the sulfur level. You could
also set a viscosity -- a safe viscosity level.
We use -- you know, I like 2.8 is a good
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viscosity. Anything below that, you know, it's out of my
comfort range. And I think by setting this standard, you
could, you know, do a lot to ensure the safety of the
ships themselves. Because not everybody -- you know,
whatever limit you set or don't set, they will use it
anyway, right?
BOARD MEMBER D'ADAMO: Thank you.
CHAIRPERSON NICHOLS: Okay. Bonnie Holmes-Gen.
MS. HOLMES-GEN: Good afternoon, Madam Chair,
Board members. Bonnie Holmes-Gen with the American Lung
Association in California.
And the American Lung Association strongly
supported this oceangoing vessel regulation when it was
first adopted. We appreciate your hard work on this. We
believe this regulation is extremely important to address
the public health impacts from exposure to diesel ship
emissions. And we're very pleased with the success that
has been achieved to date, and we appreciate that 90
percent of the emission reductions have been achieved.
And we wanted to again thank you for the work
that you've done in coordinating with the Navy and the
Coast Guard and achieving some consensus and moving
forward.
Three quick points. That we strongly support the
proposal for the extended fuel zone -- clean fuel zone to
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regain lost emission reductions. And I appreciate the
presentation. It's made extremely clear how important
that is. So that's a very positive step forward.
And as with some of our colleagues with Coalition
for Clean Air and NRDC, we are strongly supportive of
implementing the .1 percent standard as soon as
possible -- the .1 percent sulfur.
And in light of the proposed delay, we would
encourage the Air Board to do everything possible to work
with the Coast Guard to address these loss of power issues
as soon as possible to make sure we can get back on track.
We do agree with the proposal to move ahead
quickly with the vessel speed reduction regulation. And I
think that is another very positive step we can take to
move forward, because it does look like there are
significant benefits from that regulation.
And I appreciate you, Madam Chair, raising again
that the vessels certainly comply early. And we would
certainly like to work with you and do everything possible
to promote early compliance with the .1 percent sulfur
standard to get these early health benefits. So I think
that was also a very important suggestion, and we would
like to look at ways we can try to encourage that early
compliance to move ahead.
Thank you again for your hard work. And this is
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a critical part of the Diesel Risk Reduction Program.
CHAIRPERSON NICHOLS: Thank you.
That concludes the list of witnesses that I have.
And so I think we can close the record at this point.
Just remind people that the record will be reopened when
we issue a 15-day notice of public availability. And at
that time we will be again accepting comments. But in
between there won't be any comments after this hearing
date. And when the record is reopened, then there'll be
an opportunity for more comments on the proposed changes
that will be addressed in the final statement of reasons.
Before we move to a vote on this item, I do just
really want to say how proud I am that the staff has been
able to successfully navigate, if I may, a very, very
difficult issue here. I understand that our friends in
the environmental and public health community do not
lightly come to support this kind of a change. And I
really appreciate it, because they are tough critics and I
think they have realized that we've actually done a pretty
good job here of making, as somebody said, lemonade out of
lemons.
But I also -- I do want to ask the staff to just
briefly address a couple of the points that we've heard
more than one time. One is the question of whether the
fuel will be available on the time frame that we're now
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projecting. Another is the question of whether we're
looking at this issue of vessel speed reduction in a
serious way and if there's a plan to bring that forward.
Also, I know you are looking at the fuel
viscosity issue. But maybe you'd like to report a little
bit more on where that's at, what kind of work is going
on.
And then, finally, on the last point that was
raised by Mr. Krokosky, this issue about vessels waiting
for berths and running their engines offshore. I know
that's been addressed in some ports as a -- I mean it's
like the air traffic control, a scheduling issue was an
important issue. And I don't know that we have any
jurisdiction on it. But I'd be interested to hear if
there's anything going on or anything that we could do.
So I'm not quite sure who would like to address
these, but --
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: Let
me kind of -- this is Dan Donohoue. Let me kind of
orchestrate that.
On the virtual arrival, Peggy, could you kind of
talk to that at least as far as that is part of the T6
goods movement area that we can look at. We've not been
involved in it, but that's an area that there probably are
opportunities that would fall into the work that we're
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doing on the overall freight transportation thing.
TECHNICAL ANALYSIS SECTION MANAGER TARICCO: Yes,
as part of the measure in our climate change plan to try
to improve the efficiency of freight operations in the
state, we will be looking at a broad range of measures to
see, you know, how to implement them and working with, you
know, the ports and the maritime industry to see which
ones make the most sense.
Seeing if we can move things quicker through the
ports is clearly one aspect of that, and we will look at
the virtual arrival aspects as well.
CHAIRPERSON NICHOLS: Okay. So you'll add that
to the list of things that are part of the discussion or
part of the review?
TECHNICAL ANALYSIS SECTION MANAGER TARICCO: Yes,
uh-huh.
CHAIRPERSON NICHOLS: Okay. Good.
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: And,
Bonnie or Paul, on the issue of what we're doing and what
we have done with respect to viscosity, would you all like
to respond to that one?
STAFF AIR POLLUTION SPECIALIST SORIANO: I'll
start with that one. And then if Paul has some additions
to it, he can add them at the end.
In my presentation, I did mention that viscosity
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is one of the key issues in the distillate fuel. And it
does have significantly lower viscosity than the heavy
fuel oil. And so we have been looking at it -- we've
looked at it a number of ways, in terms of we have -- our
Enforcement Division, we have gotten all their records,
which is over, at the time, 4 to 500 samples, and we
looked at the viscosity of all those samples. And that
was one of the things that led us to propose this
extension, because we did find that the viscosity levels
of the fuels from .1 to .5 percent sulfur were 25 percent
higher than the viscosity for the fuel at .1. So that's
one of the issues.
Also, I talked about that enhanced fuel
specification. And I continued to give the wrong number
for the fuel specification, because I work on a testing
spec too. But there's a new fuel grade called DMZ, and it
has a three centistoke minimum fuel viscosity.
So we believe that this viscosity issue is being
addressed in a number of different ways by our Phase 1
extension and by these enhanced fuel specifications.
We also -- I think we would have to be very
careful in specifying a minimum viscosity level. It's
very dependent -- the engine manufacturers do have a
minimum that they specify for their engines. But it's
very -- the fuel viscosity is very specific on temperature
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and operation. And so for us to provide a minimum, I just
think it's too specific to the type of vessel.
So I think in terms of extending the Phase 1 and
the enhanced fuel specifications are two prongs that have
been used to approach that issue.
CHAIRPERSON NICHOLS: Well, obviously this is of
great interest to the shippers, to every -- it's a safety
issue. You know, loss of power is not something to take
lightly.
It seems to me that everybody's sort of converged
on viscosity as the answer or the problem. Are we clear
that that's the only thing that could be responsible for
the problems that have been experienced?
STAFF AIR POLLUTION SPECIALIST SORIANO: It is
one of the key issues. When California Maritime Academy
did the study, they found some other -- training, whether
the vessels operated in an automatic kind of setting or
whether there's an engineer that's actually down at the
engine. That can change some parameters.
But viscosity is one of the key fuel issues.
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: But
as we've talked about this whole thing, there's a need to
continue to investigate this closely. That's one of the
reasons why it makes so much sense to have a delay right
now and not have another change within that. As we look
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at this more closely, we do think there may be other
things that will come up. But as we have, all these
people together, the experts both from the fuel, from the
engine side and all that, we think we can work through
this issue and certainly address the issues of both the
loss of propulsion and other operational issues that
they're seeing. And that's why we just think it makes
sense.
We from here -- you know, we have in place a very
concerted effort with all of the effected things,
particularly with the Coast Guard on working very closely
on these. We have a lot of additional things that we are
going to be requesting and following up on to see, as we
can delve deeper into this issue, to make sure that we
really are addressing it, particularly before we make the
next step down to the .1 sulfur fuel.
CHAIRPERSON NICHOLS: Well, Any time there's a
change in fuel, there's always a need for a very careful
rollout. So I'm glad to hear that you're working on that.
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: Now,
would --
TECHNICAL ANALYSIS SECTION MANAGER TARICCO: I
just wanted to add one more thing.
The Coast Guard has been very helpful in this
matter. And we do have someone here today, Michael
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Boyce -- Do you want to raise your hand, Michael. He's
been excellent to work with. And they've been working to
get the word out too. As they learn things when they
investigate, like loss of propulsions, you know, they get
that information back out to the industry. And they have
a vested interest in making sure this works too, because
the ECA is right around the corner. And, you know, we
have the benefit now of we're learning. We're kind of the
pilot here. And the more we can understand this, the more
successful the ECA will be too, and I think we all want
that to happen.
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: The
next one with respect to the VSR issue, Peggy, can you
respond to that one?
TECHNICAL ANALYSIS SECTION MANAGER TARICCO:
Yeah, I'll try to respond, and then you can add things
that I might miss.
Well, I think the Chairman is very familiar with
this, because I think the concept of slowing vessels down
has been around for a long time. I think we first started
looking at this back in the 90s. So we did make a
commitment to do a technical evaluation of vessel speed
reduction programs in the AB 32 Scoping Plan in our SIP
and a diesel risk reduction plan, that we would see, you
know, if it can work, how to implement it. Because of
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resource issues that's been delayed a little bit.
The good news is that even though it's been
delayed, there's a very successful program being
implemented at the two largest ports in the state, the
Port of Long Beach and Los Angeles, where they are slowing
vessels down. They have a very high rate of compliance in
part because they've incentivized the Vessel Speed
Reduction Program, that vessel operators will get a
reduced dockage fee if they slow their vessels down.
So I think a big chunk of the benefits that we
could get from a VSR program here in California is already
occurring, thanks to the ports.
We will still complete the technical report.
We've committed to do that, and we'll get going on that
later again this year. There's going to be some really
tough questions to answer though as we look at this.
Because, you know, what's the best way to implement this
type of a program? Is it voluntary? Is it regulatory?
Is the state the best agency to be mandating speeds for
ships? Or is another agency, an international body or the
Coast Guard? Are they in a better position to establish
those ship speeds?
The other thing we need to keep in mind here is
that what we're asking today is to try to keep the vessels
out of the sea range and get them back in the channel. A
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Vessel Speed Reduction Program could undo that work here
today and incentivize vessels to go back through the sea
range. So we need to keep that in mind.
We also have to keep in mind our longer term air
quality goals. As you look to the future, we know we're
going to have to get more reductions from ships. So we're
going to have to look at -- when we look at VSR, kind of
look at it in the context of a broader range of measures,
what's going to be the best way to get the next set of
reductions from vessels? And we will do that. We think
it's a little premature at this point to commit to
adopting a regulation to mandate vessel speed reductions,
but we do think there's merit in continuing to look at it
as a one way to reduce emissions, and we will do that as
we look at our program.
CHAIRPERSON NICHOLS: I understand the
explanation and I think it makes good sense. I just
think, you know, it would make also sense to include the
advocacy groups that have been working with us on trying
to defend this regulation and our authority in a very
difficult area to, you know, have them involved in looking
at the same kinds of analyses that you are. So I think
that will help us come up with something more sustainable
in the long run.
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: We
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certainly will.
I think there's just two real short questions
left. One had to do with the .1 sulfur fuel availability.
And there were some comments made about early compliance.
About 40 percent of the samples that we've done so far is
at or less than .1 fuel. So there is a fair amount out
there. There are people using it. Looking at the
regional basis from where these came, we are seeing .1
fuel available in most of those regions, probably in
fairly limited quantities. Except for South Africa, we're
not seeing too much come out of there.
So we're doing pretty well on that. We are going
to follow this .1 sulfur fuel availability very closely,
because it's also linked to other fuel properties that
we're concerned about. So that's something that we're
going to be following. And if there is an issue on that,
we're certainly going to, you know, bring that back to you
all and let you know what's happening.
Then the final one was really why not go out to
2015. That does make a lot of sense from actually
dovetailing with the ECA. The issue is, as you saw in the
previous presentation, these reductions are very critical
SOx reductions. These are, as we talked about, essential
for achieving the PM SIP commitments, which come in in
2014. This regulation has provided about -- as is has
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provided about 50 percent of those reductions needed. So
that's -- you know, originally we looked at that as the
most practical way. But we have some air quality
requirements that we need to meet. And so that's why
we're recommending 2014.
CHAIRPERSON NICHOLS: All right. Thank you.
Dr. Balmes.
BOARD MEMBER BALMES: I just wanted to echo your
comments about the vessel speed reduction issue. I
appreciate from staff the complexity of this issue. And I
also appreciate from the Navy they don't want to see -- if
we're hoping to get the vessels through the channel
corridor not to reverse that by vessel speed reduction
concept that's not well thought through.
But I would encourage staff along with the
Chairman to try to navigate this difficult issue with the
various agencies. And, you know, maybe we're not the
right agency to spearhead this. But I think it would be
useful if we could figure out a way to amplify what's
already being done by the ports in Long Beach and L.A.
EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: Just
one final comment on that. We are seeing additional
movement on the international level to look at greenhouse
gas reductions from shipping. In fact, at the July IMO
meeting coming up, they are going to initially start
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looking at the idea of is it reasonable to try and get
emission reductions by some type of international vessel
speed reduction. So at least they're beginning right now
to start looking at that. I know the time line is
probably longer than what we usually like. But at least
it's up there for consideration, which is a good thing.
CHAIRPERSON NICHOLS: Considering how long it
took to get the IMO to address the sulfur issue, it's
practically warp speed.
BOARD MEMBER BALMES: I would just encourage us
to be actively engaged in those discussions.
CHAIRPERSON NICHOLS: We should be encouraging
that.
If there are no further questions -- we've
already closed the record. I should ask for any ex partes
communication. Yes, down here.
BOARD MEMBER BERG: I did have one phone call
with Coalition for Clean Air with Candice Kim and Martin
Schlageter. I should say that was on June 20th.
BOARD MEMBER BALMES: And I also had a phone call
on June 20th with Candice Kim, Coalition for Clean Air,
and John Kaltenstein, Friends of the Earth.
BOARD MEMBER D'ADAMO: Same phone call, June
20th, but adding Steven Sanders.
CHAIRPERSON NICHOLS: All right. Thank you all.
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May I have a motion to approve Resolution 11-25
which contains the staff recommendation?
BOARD MEMBER D'ADAMO: So moved.
BOARD MEMBER RIORDAN: Second.
CHAIRPERSON NICHOLS: All right. All in favor
please say aye.
(Ayes)
CHAIRPERSON NICHOLS: Any opposed?
Great. Thank you all very much. Good work.
Successful.
We are not quite done, although I think we may
lose a quorum. That doesn't prevent us from finishing
what we need to do.
We do have several persons who have requested to
testify during the open comment period, most of whom are
here to talk about the drayage truck regulation, although
Martin Schlageter had asked to talk to us about economic
benefits of the regulation.
So I'm going to ask our Vice Chair Ms. Riordan to
take the gavel such as it is. To take charge and thank
everybody for their attendance. And she and/or our
counsel will explain if we need to what the status of
these public comments is. Thank you.
ACTING CHAIRPERSON RIORDAN: Thank you, Madam
Chairman.
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First of all, let me invite people that are going
to speak under public comment, Martin Schlageter, Gloria
Stockmyer, Miguel Silva, Bill Aboudi, Dominick Lee, and
Ron Light to come down to the front row, please, and then
we will proceed.
Those of you who have participated under public
comment, remember that you do have our traditional
three-minute rule, just as we do during the hearings. And
so I'm going to ask that you observe that with the lights
as we have them.
And also to remind you that under public comment,
these are items that the Board has jurisdiction over but
that are not on the agenda. And we cannot take any formal
action today as a result of your testimony.
However, we can ask staff to investigate or work
with you or make some disposition perhaps of those issues
that you bring to us. Some are simply informational, and
I would assume that our first speaker is going to be more
of an informational one. And others may have some
requests. And we will handle it that way.
Martin, I'm going to begin with you. If you'd
give us your name, as all of you who are testifying, if
you would begin with your name. And if you're
representing an organization or a company, if you would
give us that information as well.
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So, Martin, let's start with you.
MR. SCHLAGETER: Thank you so much.
Martin Schlageter with Coalition for Clean Air.
I submitted through the Clerk to you an executive summary
of a paper the Coalition for Clean Air recently released.
ACTING CHAIRPERSON RIORDAN: We have that.
MR. SCHLAGETER: I wanted to share that with you
because it's a series of case studies showing business and
economic benefits from greenhouse gas and other pollution
regulations that have been initiated here at CARB.
The shipping clean, growing green, how companies
are earning more by polluting less at California ports.
Goes through a wide variety of sources in the ports of
freight transportation sector and gives case studies where
economic benefits are being achieved, efficiencies are
being found, new markets are being opened up, and green
technologies are being developed. And that is the vision
of greening the economy that is I know a part of our
California mandate here, of which CARB is so important.
One of the findings I want to highlight there in
this report to you is that it is a call for us
collectively to be resilient and committed to the
deadlines that we set when we set forth regulation.
Emerging companies and investors and green technology
developers and workforce training programs are all reliant
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upon the commitment you make when you set clean air
regulations. These clean air regulations are creating
markets. They're improving efficiencies, as I said. And
they're creating jobs here in California.
And so to stay committed to your deadlines and
stay committed to your standards allows investors and
emerging companies to plan and to be assured of the
marketplace that they are planning for and gaining
investment around. As we came across today, certainly
there are necessary changes that occur.
But know that to stay committed to your
regulations is one way of helping ensure that the green
economy continues forth. And these emerging companies,
which are feeding companies that are trying to comply with
your regulations, they need to be protected by a
commitment to those regulations. Companies that are
investing to comply need your continued vigilance in
rooting out companies that are trying to skirt compliance.
So these are -- this is a report that I think
you'll find useful and encouraging and I wanted to share
with you today as a way to raise my pom-poms as the
cheerleader for clean air regulations.
Thank you.
ACTING CHAIRPERSON RIORDAN: Thank you very much,
Martin. And we do have that and we will keep that.
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Okay. Next speaker will be Gloria Stockmyer.
MS. STOCKMYER: Good afternoon. My name is
Gloria Stockmyer, Stockmyer Trucking.
I'm here today to comment on the Board's decision
in December to dismiss staff's recommendations to offer
the same concessions and delayed rules to drayage trucks
that you have given to trucks governed by the truck and
bus regulations. Your decision shows your failure to
acknowledge the substantial investments made by many of
the 5400 drayage trucks that visit the Port of Oakland
regularly.
Based on information that CARB published, a lot
of the trucks went and purchased 2004, '05, and '06 engine
model trucks with the plan of retrofitting them. And now
they're being told that there are no certified filters or
retrofit devices. So these men and women are stuck with
trucks that are worthless. And they're stuck with
payments and they can't sell them. And if they were able
to sell them, they couldn go buy a 2007 model truck. But
because they've been de-valued by this decision, they're
going to be jobless.
And, you know, I really ask that you reconsider
and revisit this issue. Very important to a lot of
drivers. Thank you.
ACTING CHAIRPERSON RIORDAN: Thank you very much
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for your presentation. I think we'll take it all. And
because all of the speakers are on this subject, then
we'll respond at the end.
The next one speaker will be Miguel Silva.
MR. SILVA: Hi, members of the Board. My name is
Miguel Silva, and I work with Horizon Freight Systems in
the port of Oakland.
First of all, I wanted to thank you for
responding to my comments regarding your decision not to
send Phase 2 of the drayage truck rule back in December.
Unfortunately, the letter that I received from the Board
was extremely disappointing, not only because you denied
my request to reconsider your decision, but because the
reasons were inadequate. It failed to justify the
decisions to potentially put thousands of port drivers out
of business for minimal environment benefit, while
granting relief to non-port truckers.
You tell us that the Board found it necessary to
retain Phase 2 requirements to protect residents of the
impacted communities from exposure to diesel PM and ozone.
Yet, you failed to recognize the cleanest trucks in those
communities currently are the drayage trucks.
A 2010 air district study found an anticipated 40
percent in reduction in NOx emissions at the port due to
the replacement of many older polluting trucks that had
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occurred in Phase I implementation. But yet you continue
to allow significant emissions from non-port trucks
through those same communities and freeways.
The balance of emissions today has changed. And
there is no valid justification for widening the disparity
between the trucking rules. If the goal is to protect
communities like West Oakland, Phase 2 will not achieve
that goal.
You also say that the Board concluded that
retaining existing Phase 2 requirements would provide
fairness within the drayage truck industry to the truck
owners who have made greater investments in new trucks;
that delaying Phase 2 requirements would have favored
truck owners who have not yet invested in pollution
controls and penalizes the owner/operators of fleets
driving cleaner trucks.
This statement is elitist. It favors wealthy
companies and punishes the poor. Every truck that
currently serves the port of Oakland has made investments
in pollution control, be it by retrofitting the trucks or
by purchasing newer year model trucks that they could
afford. All have made sacrifices commensurate to their
economic situation. Phase I already has played a heavy
financial burden on port truckers. To ignore that seems
to be deliberately contemptuous of the plight of the
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working class. Many have gone out of business. Many have
incurred high interest rate loans and large amount of
debt. Port truckers have done their share and more to
meet State clean air regulation at a great personal cost.
Not delaying Phase 2 to favor a handful of
wealthy companies at the expense of thousands of
owner-operators made up of mostly low income minorities is
discriminatory. The Civil Rights Act of 1964 requires
your agency under State law to conduct your program,
policies, activities in a manner that ensures the fair
treatment of people of all races, cultures, and income
levels, including minority populations and low-income
population of the state.
I think it would be inappropriate and unlawful to
proceed to implement these policies without mitigating or
even looking at the impending devastating impact of your
decision.
Thank you for the time.
ACTING CHAIRPERSON RIORDAN: Thank you Mr. Silva.
Mr. Aboudi.
MR. ABOUDI: We've been here since 9:00. And my
name is Bill Aboudi. I'm with AB Trucking. I work at the
port of Oakland. I've been there since 1988.
And I've learned over the years that before you
punch somebody because they're stepping on your toe, you
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better tell them. So I want to tell you, you guys are
stepping on all of our toes at the port of Oakland. We've
had enough.
I've gone from 13 trucks to six trucks. We've
been suffering for the last three years. The promises
that were made to us are not kept. The money didn't come.
Then you call us something like an actor that came late to
the show, that we didn't apply early. It's bull. We
applied when the outreach was done. The money ran out.
Didn't run out for one or two. It ran out for 1300
people; 1300 people that stood in line day and night to
try to go through this process.
You've overcomplicated the system. I've attended
every drayage workshop that was in Oakland. We've
participated in everything. We tried to do everything.
This is not the way it was supposed to go. We were going
one year ahead of on-road rule. We're being backed by the
money, because we're the guinnea pigs. And we're being
slaughtered right now.
And you have to look at it. This is a very
dangerous situation. You can talk to Cynthia Marvin. You
can talk to Diane Bailey from NRDC. We have done our best
to comply with everything. We want to reduce pollution.
We live in those communities. We interact with that
community.
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But your decisions and what you're doing is not
correct. The 2004, '05, and '06, that rule was changed
after people were led to believe that that's an option
that they had. The years were shortened. Then we were
told that we didn't promise you that there was going to be
a DPF that would reduce NOx. We had hoped. What does
that mean? How do you make a law hoping that somebody was
going to do something? You have to make sure. Just like
with the earlier regulation, you're mandating. You're
watching. You're adjusting. You've adjusted it for
on-road rule. Why not adjust it for the port drayage
trucks that reduce the pollution by 50 percent, NOx by 40
percent?
We did that already. We upgraded our trucks. We
upgraded it on our own dime; 2700 of us upgraded on our
own dime. Didn't take a penny. 1300 got -- instead of
20,000, we got 5,000.
So we can always ask the military to go ahead and
give them some efficiency so they can do their test a
little faster and give us that $30 million that they burn
in one day. If you have that kind of money, we'll buy
brand-new trucks or the two-million-dollar bus.
ACTING CHAIRPERSON RIORDAN: Thank you.
Dominick Lee.
MR. LEE: Members of the Board, my name is
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Dominick Lee. I'm with VA Transportation in Oakland,
California. There's about 90 owner-operators working
there.
As you can probably already tell, we are a little
bit upset in Oakland at this decision that was made in
December. We are all, of us here, work in Oakland. We
are not one-time visitors. Especially like my guys, 90
owner-operators, 80 percent of my guys stay at the port
all day.
If you want to talk about emissions to problem
that were there previously and the correction that was
done is largely due to the community of truckers like me
and me colleagues here based in Oakland itself.
I also had the pleasure the past year to be on
the Truckers Work Group in Oakland where you sent your
staff members down on a monthly basis to talk about
amendments to be made to the drayage rule based on the
affects of the economy.
And I'm kind of a little bit -- not upset -- I
don't know if you were misinformed, but some of the basis
that we got from Mr. Goldstene on behalf of Chairman
Nichols was based upon drayage industry or the port
industry is rebounding. I don't know where you really got
that. We haven't responded or rebounded at all. I went
from having about 170 trucks in about 2006 to running
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about 80 trucks in the port of Oakland. There's about
half of that.
Now, if you look at Journal of Commerce, we may
have rebounded last year, but all steamship lines -- and I
believe my customers estimate money for us to trickle down
and be economically better. They've all lost hundreds of
millions of dollars in the first quarter. They're all
bracing for another 2009 where some steamship lines have
lost over a billion dollars. If there is to be any relief
made to the trucking community, it should come to the
drayage. It should come to the guys that have already
invested house payments and are seriously looking for
relief.
The gentleman here earlier talked about you need
to keep deadlines and technology and all that. I think
sometimes we jump ahead of the schedule and propose
deadlines when don't have technology. There is these guys
that went out there and bought 05-06 trucks with the
promise of technology to keep on working until 2020. You
don't have that available. And at this point, you're
proposing options for them that are just not viable at
this point.
It's a promise. If it's not there, then some
changes need to be made to make accommodations for these
truckers that want to stay at work. It's about fairness.
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And I think sometimes we all sit here and play a zero sum
game. I think there could be compromises that could be
made and keep everybody working.
I am seriously asking you guys to reconsider and
keep Oakland's port drivers working. Thank you.
ACTING CHAIRPERSON RIORDAN: Thank you, Mr. Lee.
Mr. Lee, the Committee that you mentioned just
briefly, how many are on that Committee that you just
mentioned?
MR. LEE: You're talking about the Truckers Work
Group?
ACTING CHAIRPERSON RIORDAN: Yes.
MR. LEE: Well, Truckers Work Group is a monthly
meeting put on the trucking community in the Port of
Oakland and is open to all terminal operators, steam ship
lines, and all trucking companies that serve the port of
Oakland, including truckers who come in from the valley as
well.
ACTING CHAIRPERSON RIORDAN: But individual
truckers can be there?
MR. LEE: Yes, ma'am. And actually, that's
really been the misinformation. I mean, for a year, you
sent staff down saying there's going to be amendments
made, extensions made to the filters, extension made to
their trucks. And, you know, within ten minutes, you guys
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change your mind as to take that away from them. That's
what I'm asking you --
ACTING CHAIRPERSON RIORDAN: But the group
represents pretty fairly all of the interests in the area?
MR. LEE: All of Oakland truckers, yes.
ACTING CHAIRPERSON RIORDAN: Thank you.
Appreciate that.
Mr. Light.
MR. LIGHT: Good afternoon, Madam Vice
Chairman -- is it -- and Board members. My name is Ronald
Light. I'm Executive Director of West State Alliance,
which is the Port of Oakland Truckers Trade Association.
I'd like to try to hit a few high points, if I may.
Our organization over the past six months has
submitted comments to Chairman Nichols, to the Board
members individually, to the Board collectively during the
last 15-day open comment period. We can only hope that
you avail yourselves of our written comments where we go
into great detail and analysis and documentary support of
our various positions.
I was coming here, I raised the question -- I
posed the question to myself what would be the best course
of action at the point in which to address all of you
today? What I believe that it is, is to question what
your intentions were on December 17th and whether or not
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the Board was fully aware and fully apprised of the
consequences of their actions and of their intentions when
you made the decision not to enact the delay to the Phase
2 NOx regulation, which would have postponed the rule from
2014 to 2020. So it's within that vein that I would like
to continue.
As a couple of my colleagues have alluded, a
research scientist at U.C. Berkeley, Dr. Rob Harley, was
commissioned by the ENAQMD to conduct a study this last
year to determine to what extent there had been emission
reductions from 2009 to the advent of the Phase I PM
regulation in January 1st -- or actually, it's more like
June of last year.
And as my colleagues have alluded, there was a
50 percent reduction in PM diesel emissions and an
unanticipated 40 percent reduction in NOx. And that's
extremely significant, because what it reflects is the
fact that as older trucks were phrased out and newer
trucks were purchased largely at the expense of the port
truckers themselves, it's created a vast unanticipated
improvement in NOx reductions, thereby eliminating the
need to remain consistent with the implementation schedule
for Phase 2 that had been adopted.
And in fact, staff had proposed, as you well
know, a delay in implementation of the Phase 2 rule until
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2020, in part to reflect the fact that there were far
fewer emissions being emitted into the atmosphere during
this period.
As my colleagues also have intimated, one of the
big issues was the fact that when the Phase 2 rule was
originally adopted by this Board, it was predicated on the
existence of not only PM filters, but of NOx reduction
filters. And in the case of vehicles of 2004, '05, and
'06 engines, the idea was that as those trucks required
diesel filtration that a dual purpose diesel and NOx
emission reduction filter could be purchased and
retrofitted. In fact, that does not exist. It has not
been developed. It's not been submitted to the CARB
Board. It's not been approved. It's not on the market.
So all of those 2700 truck owners have no option
when it comes time for them to retrofit their trucks.
They would do so -- this is with PM emissions filters.
They would do so with the fore knowledge that on January
1st, 2014, that their trucks would no longer be compliant
due to the NOx emissions rule. That means they need to
purchase a $20,000 filter and keep them in compliance for
perhaps one year.
I'm sorry I've gone over. I did have a few more
points to make.
ACTING CHAIRPERSON RIORDAN: I felt that because
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you represented a larger group, you could have 15 seconds
extra.
Mr. Light, I appreciate your comments. And I
thank you. And I'm going to have to tell you I have to
review your submittals. And maybe other Board members
will have some questions.
And I'm sorry, Board members, I didn't ask if
there were any questions on your behalf for any of the
other speakers. But this would be the time. And then I'm
going to ask staff to perhaps make some remarks and make a
suggestion about where we might go from here.
But first let me just invite any questions, if
there are any, Board members.
BOARD MEMBER BERG: I'd be interested in what
staff has to say.
ACTING CHAIRPERSON RIORDAN: Mr. Goldstene.
EXECUTIVE OFFICER GOLDSTENE: Thank you, Ms.
Riordan.
We'll ask Cynthia Marvin to provide a brief
overview and provide context of where we are. She can
respond to some of what you just heard.
ACTING CHAIRPERSON RIORDAN: And then perhaps
some direction what the next step might be. Why don't do
you the overview and response.
ASSISTANT DIVISION CHIEF MARVIN: Thank you.
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We certainly are very well aware of the level of
concern in Oakland. Have spent a fair amount of time
listening to those concerns, looking ourselves at what was
possible from the system standpoint, and also trying to
assess what the impact is in terms of the number of
trucks.
So the letter that Chairman Nichols had sent back
to Miguel Silva and the West State Alliance on behalf of
many of the truckers who spoke today really attempts to go
through each of the substantive issues that they raised
and provide the facts as we understand them.
I think in terms of overall context, we
absolutely are making progress, and happily so, in
reducing diesel pollution at west Oakland.
As Dr. Harley's study confirms, I think it's
important to note those improvements are due to a
combination of cleaner trucks, cleaner ships, cleaner ship
fuel, cleaner cargo handling equipment, really the whole
spectrum of sources that operate in that community. So
many of those are cleaner due to the Board's regulations,
but it's not solely trucks that are driving that
improvement. We're certainly happy for it, regardless.
In terms of where we go in the future, many of
these folks did submit comments in the 15-day comment
process on the changes to the drayage rule. So staff will
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be going through the prescribed process to evaluate and
respond to those comments.
Separate from the regulatory process, I've been
in some discussions with the city counsel member from
Oakland who has raised many of the same financial concerns
and expressed an interest in looking at how we can find
new ways to help finance additional upgrades at the port
of Oakland. And what we've talked about doing is trying
to combine the State's loan and loan guarantee programs
that are expanding right now, as Ms. Berg is well aware,
and perhaps combine those with funds generated or
developed by the city of Oakland so that there is a
stronger financing program available.
In the letter back from Chairman Nichols to the
West State Alliance, we did note the recovery or the
rebound at the Port of Oakland. That was not in the
analysis of any one company's economic state. It was a
statistical look at the amount of cargo that's flowing
through the Port of Oakland. And what we see by the Port
of Oakland's own statistics is that the cargo volumes have
returned to the pre-recessionary levels. So that tells us
that there is a need to stay vigilant in terms of
requiring cleaner trucks and also that ultimately that
business will provide a source to help finance those
cleaner trucks.
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ACTING CHAIRPERSON RIORDAN: Mr. Goldstene.
EXECUTIVE OFFICER GOLDSTENE: I think at this
point we are in the middle of the process of the 15-day
process where we will respond to the comments we've
received.
I agree with Cynthia that the letter from
Chairman Nichols already responded to the issues raised
here. And what we can do is make sure we distribute that
to the Board so you have that information.
ACTING CHAIRPERSON RIORDAN: Yes, Dr. Balmes.
BOARD MEMBER BALMES: Well, I appreciate your
comments, Cynthia.
But being from Berkeley, I know that the City of
Oakland is in a great financial straits. When you talk
about partnering with the city to try to generate some
more funds, is there any reality there on the city side?
Not to mention the State budgetary issues.
ASSISTANT DIVISION CHIEF MARVIN: Excellent
question. And that was part of my discussion with the
city counsel member.
I think I'm realistic enough not to expect the
city itself to provide funding. But what she was talking
about was looking at some of the economic development
funds that may be available for the city or some of its
subsidiaries, non-profits to apply for as a financing
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mechanism.
So I can't answer the question. I can just tell
you that there is a local elected official who wants to go
for that, try it, and we committed to work with her.
EXECUTIVE OFFICER GOLDSTENE: I've been corrected
by Mr. Fletcher. We did send the letter that Mary sent to
the Board already, but we can re-send it.
MR. ABOUDI: Can I have a rebuttal?
ACTING CHAIRPERSON RIORDAN: No. I think based
on fairness --
MR. ABOUDI: But there's wrong information being
dished out.
ACTING CHAIRPERSON RIORDAN: I realize there's a
disagreement --
MR. ABOUDI: It's not a disagreement. It's
inaccurate information that's been dished out to the
Board.
EXECUTIVE OFFICER GOLDSTENE: We'll finish the
rule making process. In that forum and in that context,
we will reply to the comments.
ACTING CHAIRPERSON RIORDAN: And I think, Mr.
Goldstene, then what -- after you've done that, I think
because of the interest shown by the speakers that then
the -- it would be helpful if you then made that
information available to us. Lots of times after the
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15-day comment period is over or the period is over, then
we just -- that moves on. I think in this case perhaps
we'd like to be a little bit more aware of the response.
In terms of looking at opportunities for funding,
realistically, cities are in straits now. State is in a
straight.
If the port has come back financially -- well,
not financially. Let's say the trade or the commerce
there has come back, is the port doing anything to help in
this regard at all? No. All right. No.
ASSISTANT DIVISION CHIEF MARVIN: Unfortunately,
no. But that would certainly be another potential source
of funding to help the sort of financing program.
ACTING CHAIRPERSON RIORDAN: Have we contacted --
forgive me, because you probably have told me this and I
just don't remember.
Have we contacted them? Have we asked them?
Have we worked with them at all to see if there was any
interest in helping?
ASSISTANT DIVISION CHIEF MARVIN: We've certainly
had that discussion, both the Air Resources Board staff
and the Bay Area Air Quality Management District staff
have had that discussion repeatedly with the port of
Oakland. But we are willing to have that again.
ACTING CHAIRPERSON RIORDAN: I think it would
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bear, you know, doing it again.
I think sometimes if people are presented as we
have been today with some of the individual stories, you
know, maybe there would be an interest.
I don't know if there is a model to follow in the
ports of Long Beach and L.A. Maybe there is a model
there. Do I not remember they did something?
ASSISTANT DIVISION CHIEF MARVIN: Down in
southern California, the two big ports were very
aggressive in both setting their own requirements for
access to the port for cleaner trucks. They established a
dirty truck fee. They raised money by allowing those
dirty trucks to come to the port prior to the ARB
regulation. And they took that money, and then a number
of port operators revenues and greatly subsidized the
transition to cleaner trucks.
The port of Oakland contributed $5 million to the
overall funding program that was implemented in 2009 and
2010. But it is a much smaller contribution proportional
than the southern California ports. They considered doing
a gate fee and a similar program to the L.A. and Long
Beach situation, and the Oakland Port Commissioners
declined to pursue that approach.
ACTING CHAIRPERSON RIORDAN: Are they governed
similarly -- the three ports -- in other words, is there
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any difference in the governance and the way it's set up?
ASSISTANT DIVISION CHIEF MARVIN: I think there
are some technical differences. But from a general sense,
I would say each of the ports are run by an appointed
Board of Commissioners or the Port of Harbor Commissioners
generally appointed by the cities where those ports are
located. So in Oakland, the Mayor appoints the Boards of
Port Commissioners.
BOARD MEMBER BERG: But they do run
independently.
ACTING CHAIRPERSON RIORDAN: But I'm trying
decide where to put the -- I mean, we obviously need to
have a discussion, we and Bay Area and all. But I'm
looking at those who are in the audience and I'm thinking
where would their time be best spent if we were looking
for some additional resources that would mirror what's
happening down in the other two ports.
And I'm going to make a suggestion -- not knowing
the exact governance and how they're set up. But usually
the Port Commissioners or Board members, however this
governance is designed, they need to hear from you. And
you may have been there many times. But if we go and
talk, you go and talk, maybe something can happen based on
our belief that commerce has returned to that port.
Now, if it hasn't, then that's a different story.
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But if it has, then I think the case could be made that
you need to be there along with us, not physically in the
same room at the same time, but there at their public
meetings and we at our meetings. And that's what I'm
going to suggest to everybody.
But I would like our staff -- if the Board agrees
with me -- to go back and have another conversation with
them and explain to them what has happened in the other
ports and that there is a real interest on our part to see
some effort being made to help with the finances.
EXECUTIVE OFFICER GOLDSTENE: We'll talk to the
port and the air district. And we'll also keep the Board
informed as we move forward on completing the 15-day
process.
ACTING CHAIRPERSON RIORDAN: Thank you. Thank
you, Mr. Goldstene. Any other comments, Board members?
With that, then we'll adjourn our meeting. And I
thank you very much.
(Thereupon the California Air Resources
Board meeting adjourned at 3:43 p.m.)
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CERTIFICATE OF REPORTER
I, TIFFANY C. KRAFT, a Certified Shorthand
Reporter of the State of California, and Registered
Professional Reporter, do hereby certify:
That I am a disinterested person herein; that the
foregoing hearing was reported in shorthand by me,
Tiffany C. Kraft, a Certified Shorthand Reporter of the
State of California, and thereafter transcribed into
typewriting.
I further certify that I am not of counsel or
attorney for any of the parties to said hearing nor in any
way interested in the outcome of said hearing.
IN WITNESS WHEREOF, I have hereunto set my hand
this 9th day of July, 2011.
TIFFANY C. KRAFT, CSR
Certified Shorthand Reporter
License No. 12277
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